Kojima: Sony Pulled Funding for PHYSINT in June; Xbox Later Agreed to Publish

Hideo Kojima said Sony told Kojima Productions in a mid-June Zoom call that it would stop funding “PHYSINT,” a sudden reversal that left the independent game studio worried about its future until Microsoft’s Xbox later stepped in to publish the project.

In an interview published Sept. 20 by The Washington Post, Kojima said the decision came without explanation. “I was just shocked and surprised,” Kojima told the Post. The timeline then moved quickly into public view: Xbox Wire announced Sept. 9 that Xbox would publish “PHYSINT” as part of an expanded partnership with Kojima Productions, and PlayStation Studios said Sept. 10 that it had decided to “step away” from the project.

The stakes were especially high because Kojima Productions is an independent studio, founded by Kojima in 2015 after leaving Konami. Large-scale games at that level typically depend on outside publishing support. Kojima told the Post he feared what Sony’s withdrawal could mean for a company of nearly 200 people. “We’re an independent studio. That means if they can’t fund us, our studio could collapse,” he said.

Kojima told the Post that no employees were laid off after Sony pulled funding. Instead, staff were reassigned internally, with many moved onto “OD,” another Kojima Productions project, while a smaller team remained on “PHYSINT.” The project has since secured a new publisher in Xbox, allowing development to continue.

That outcome made the breakup all the more notable because Sony and Kojima had an established relationship through “Death Stranding” and “Death Stranding 2: On the Beach.” “PHYSINT” had appeared to extend that partnership when it was announced in January 2024 as Kojima’s new action-espionage game, a return to the stealth and spy-fiction territory most closely associated with his earlier work.

Kojima told the Post he had previously discussed returning to espionage games with Jim Ryan, the former head of PlayStation, and said Ryan had been enthusiastic about the idea before retiring. Kojima also described “PHYSINT” as potentially his biggest commercial opportunity. “This is the biggest selling title I could possibly create,” he told the Post.

Sony has not publicly provided a detailed reason for ending its involvement. Kojima told the Post that Sony did not explain the decision to him during the June call. In its Sept. 10 statement, PlayStation Studios said: “After careful consideration, we have made the difficult decision to step away from collaborating with KOJIMA PRODUCTIONS on its project PHYSINT.”

For the games industry, the episode stands out as a rare public account of a major publisher backing away from a high-profile project midstream, and of a studio head describing the immediate risk in plain terms. But the current status is clear: “PHYSINT” is still moving forward, now with Xbox as its publisher.