Hideo Kojima has revealed new details about Sony’s decision to end its involvement with PHYSINT, saying the news was delivered during a Zoom call in mid-June and initially left him concerned about the future of Kojima Productions. Speaking in an interview with The Washington Post, Kojima said Sony did not provide him with a reason for ending its funding of the action-espionage project. PHYSINT has since secured Xbox as its new publishing partner and remains in development.
Kojima said the June meeting included himself, Kojima Productions president Shinji Hirano and longtime translator Aki Saito, although he declined to identify the Sony representative who delivered the decision. According to Kojima, the studio was caught off guard because he believed PHYSINT was a project he and Sony Interactive Entertainment had committed to developing together. The announcement came well before the public learned that Xbox would publish PHYSINT following Sony’s exit in September.
The cancellation created a potentially serious financial problem for Kojima Productions because the independent studio relies on publishing agreements to finance individual projects. Kojima told The Washington Post that he was concerned the studio could collapse if replacement funding could not be found, particularly because staff had already been hired specifically for PHYSINT. No employees were laid off after Sony withdrew, however, with some developers temporarily reassigned to OD while a smaller team continued work on PHYSINT.
Development had also progressed beyond the conceptual stage when Sony pulled out. Kojima said the game’s plot, overall concept and storyboards are complete, while the studio has begun building 3D models and scanning members of the cast. Kojima Productions recently confirmed Bill Skarsgård as the lead actor in PHYSINT, with Charlee Fraser also appearing in the project’s newly released promotional material. The studio is still experimenting with different game engines, according to Kojima, and has not yet settled on a final choice.
Kojima also described how the situation recalled his experience with Silent Hills, the Konami project that was canceled after the release of its playable teaser, P.T. He said one of his concerns was having to tell actors, artists and other collaborators that another major project had been abandoned after agreements and preparations were already in place. Rather than cancel PHYSINT, Kojima informed team leaders that he planned to find another publisher and continue development.
Microsoft became one of the most obvious options because Kojima Productions was already working with Xbox on OD. Kojima said he approached other unnamed publishers as well, but discussions with Microsoft progressed quickly because the companies already had an established relationship. Xbox formally announced the expanded partnership on September 9, with Microsoft now publishing PHYSINT alongside its existing work with Kojima Productions.
The Washington Post interview also adds context to separate reporting about why Sony ended the arrangement. Bloomberg previously reported, citing people familiar with the project, that Sony had concerns involving PHYSINT’s budget, missed deadlines, profitability and platform exclusivity. Kojima Productions has since challenged that account, saying those claims did not come from official or on-the-record sources and urging readers to treat them cautiously. Kojima himself said Sony did not explain its reasoning during the cancellation meeting.
Despite the abrupt change, Kojima said the studio’s relationship with Sony remains intact and that he does not consider the companies to be in a dispute. Kojima Productions has similarly stated that it remains healthy and profitable while PHYSINT continues under Xbox. The project still has no announced release date, but development is moving forward with its story, casting and early production work already underway.
