Hideo Kojima, Founder of Kojima Productions, has described how his studio came close to collapse after Sony pulled funding for PHYSINT, in two interviews published this week with IGN and The Washington Post.
In June, Sony Interactive Entertainment (SIE), the company behind PlayStation, told Kojima during a Zoom call that it would no longer fund the game. PHYSINT is an action-espionage title seen by many as a spiritual successor to Metal Gear, the stealth series Kojima created at Konami. Kojima took the call alongside Shinji Hirano, President of Kojima Productions, and Aki Saito, the studio's Head of Talent Development.
"My mind went blank," Kojima told IGN, adding that he could not recall much of what was said in the meeting.
Kojima told both outlets that he felt no anger at the time. His first worry was the studio itself. Kojima Productions is independent and signs funding contracts one project at a time. It had only two: PHYSINT and OD, a horror game being made with Xbox and co-written by Jordan Peele. Kojima had grown the team to around 200 staff on the strength of the PHYSINT deal. He also had bank loans that depended on projects moving forward.
"Because it's a sinking boat, almost," he told The Washington Post, noting that he had lived through something similar at Konami.
P.T. fears and a quick pitch to Xbox
Kojima also told IGN that he had already begun scanning actors and talking to artists for the project. That brought back memories of P.T., the 2014 playable teaser for Silent Hills, which Konami cancelled in 2015 after Kojima left the company. "I didn't want to do the same thing we did for P.T.," he said.
He decided to keep the news between himself, Hirano and Saito while they worked out a plan. According to Hirano, Kojima went straight back to work on the game's concept once the call ended. "He went back to his room and started working," Hirano told The Washington Post.
Kojima said he spoke to several possible partners, including film studios and streaming companies, and pitched PHYSINT as a wider IP (intellectual property) that could extend into film, anime and music. He then approached Xbox, which already had a working relationship with the studio through OD. Recalling Xbox's reaction, he told IGN the team responded: "This pitch was fantastic. Never seen a pitch like this!"
Kojima said he had met Asha Sharma, Xbox's new CEO, in Redmond in April and felt the pair "kind of clicked". Xbox told Bloomberg the decision was an easy call.
In the meantime, part of the PHYSINT team moved over to OD, while a smaller group stayed on to keep developing the game. Kojima said no one was let go and no one left. Staff were told about the move to Xbox the day before it was announced earlier this month.
Why Sony walked away remains unclear
Kojima told both outlets that Sony never gave a reason for its decision and has not contacted him since the June call. He would not say who at Sony delivered the news.
"So if this was the conclusion, I would've wanted to hear it a little earlier," he told IGN. He stressed that the two companies are not in a dispute, and said he is still a big fan of Sony's products.
Kojima added that the project had first been agreed with Jim Ryan, SIE's former CEO, before Ryan retired. PHYSINT was officially announced in January 2024.
Earlier this month, Bloomberg reported that Sony's withdrawal was linked to concerns over budget, missed deadlines, profitability and the game not being exclusive to PlayStation. It also reported that the Death Stranding games fell short of PlayStation's revenue expectations. The IGN interview took place before the report was published.
In a statement, Kojima Productions urged readers to treat the report with scepticism, saying none of its claims came from official or on-the-record sources. The studio said it is in a 'healthy, profitable state' and that its relationship with PlayStation 'remains strong'. Bloomberg reporter Jason Schreier responded on Bluesky, stating that, "it doesn’t dispute any of our reporting so I don’t have much to add there. But I will add that (as I said a couple weeks ago), the Physint cancellation came after several months of negotiations between KoPro and Sony. Wasn’t exactly out of nowhere".
It is not yet clear whether PHYSINT will still come to PlayStation. Kojima told IGN that platform plans are "a question for Xbox". He also said the game's engine has not been decided.
Kojima said the game carries extra weight for him because it falls on Kojima Productions' 10th anniversary and his own 40th year of making games. He told The Washington Post he also saw the project as a test case for independent studios. "I wanted to stand firm for indies, so I needed to find a new partner," he said.
Kojima appeared at the Xbox TGS 2026 Showcase on September 17th to give updates on both PHYSINT and OD. He has also said he would like to adapt PHYSINT into a live-action film.
