Sony Interactive Entertainment has officially terminated its publishing agreement with Kojima Productions for the action-espionage title Physint, ending months of speculation regarding the project’s future within the PlayStation ecosystem. The move, which marks a rare public separation between Sony and Hideo Kojima, was followed by a swift announcement that Xbox has signed on as the new publisher for the title as of September 2026.

The transition follows a period of internal friction regarding the game’s production. According to a Bloomberg report by Jason Schreier, Physint had allegedly exceeded its budget and missed multiple internal development deadlines while under Sony’s oversight. These hurdles reportedly occurred as Sony tightened its fiscal strategy following underwhelming returns on other high-budget projects.

Sales Pressure and the Mid-June Cancellation

While Sony’s official public stance cited a “difficult decision to step away” made with mutual respect, the timeline of the fallout suggests a more abrupt conclusion. Kojima Productions reportedly received the formal notice of cancellation from Sony in mid-June 2026. Kojima later characterized the notice on social media as “unexpected,” indicating that the studio had been shopping the project to other partners for roughly three months before the official Xbox reveal.

The decision to drop the project appears to be rooted in the commercial performance of the Death Stranding franchise. A report from Forbes suggests that Death Stranding 2: On the Beach—which remains a Sony-published title—did not meet the internal revenue expectations set by PlayStation leadership. With estimated sales of 2.5 million copies, the sequel’s performance reportedly influenced Sony’s hesitation to fund the ambitious, high-cost development requirements of Physint.

Xbox and Transmedia Ambitions

The new partnership with Microsoft represents a shift in how Physint will be brought to market. Xbox CEO Asha Sharma officially announced the collaboration on September 9, 2026, positioning the game as a cornerstone of Microsoft’s future lineup. This agreement is notably broader than the previous Sony deal, as it includes a commitment to collaborate on storytelling across film and television alongside the game’s development.

As GamesIndustry.biz reported, this pivot comes after Kojima Productions sought a publisher willing to accommodate a more flexible distribution model. The loss of Physint from the PlayStation first-party slate raises questions about the long-term exclusivity of future Kojima projects, though Death Stranding 2 remains on track for its current platform commitments. For Physint, the change in leadership means the project will now leverage Xbox’s infrastructure, though it remains unclear if the title will continue to use the Sony-owned Decima Engine or migrate to a new framework like Unreal Engine 5.