Hideo Kojima secured a new publishing deal with Xbox for his stealth-action project Physint after Sony suddenly cancelled its funding over a Zoom call in mid-June. The shift followed disagreements over budget, deadlines, and IP ownership, while industry reports estimated the game’s cost at around $400 million.
The sudden fallout between PlayStation Studios and Kojima Productions sent shockwaves through the industry this month. Sony walked away from Physint—Kojima’s spiritual successor to the Metal Gear Solid series—after months of negotiations failed to yield a satisfactory agreement. The split left the celebrity developer scrambling to secure new backing for a massive project that had only recently been announced.
The Zoom Call That Left Kojima’s Mind Blank
In mid-June, Sony delivered the cancellation news during a virtual meeting. Studio president Shinji Hirano recalled that Kojima just went totally blank when they told me
after receiving the notice from unnamed PlayStation representatives who stated they can no longer fund development for Physint.
I was just shocked and surprised. I didn’t have any anger or sadness. I was just thinking ‘what should I do?’. It’s a big problem for us and I couldn’t tell staff at the time.
Hideo Kojima, via The Washington Post
Kojima’s primary anxiety centered on his nearly 200 employees. Having staffed up to run two parallel titles—OD and Physint—he feared our studio could collapse if a major contract vanished without warning. To protect cash flow and avoid layoffs, management quietly shifted a portion of the Physint development team onto the OD project while leadership raced to find a lifeline. Kojima also faced pressure from an existing bank loan secured after the release of Death Stranding, noting that a public cancellation would have caused severe financial trouble.
Budget Realities, Exclusivity Demands, and the $400 Million Figure
Behind the scenes, the partnership unraveled over financial friction. Reports from Bloomberg indicated that Sony grew concerned about the project’s progress, its cost, and Kojima’s reluctance to commit to exclusivity.
Negotiations stalled as Sony weighed the costs against Kojima’s insistence on retaining full intellectual property ownership and pursuing timed exclusivity. Reports from The Game Business subsequently claimed that the project carried an estimated budget of around $400 million, putting it at the upper-end of AAA development. While Bloomberg reporter Jason Schreier noted he could not independently verify exact documentation, he shared that someone at Xbox with firsthand knowledge of the deal told me that they signed Physint for significantly less than this, suggesting that Microsoft managed to negotiate a lower financial commitment than what Kojima had originally sought from PlayStation.
Kojima Productions Pushes Back Against Leaks
Xbox Steps In at the Tokyo Game Show
The scramble ended when Microsoft stepped forward. Xbox officially introduced Kojima at the Tokyo Game Show as the new face of the franchise under CEO Asha Sharma, who has refocused the brand on exclusives.
As development restarts under a new publishing umbrella, the project remains years away from release, but the partnership secures the immediate future of Kojima Productions and averts the collapse feared during that June Zoom call.