Hideo Kojima has revealed that Kojima Productions came within days of shedding its entire Physint team after Sony Interactive Entertainment abruptly terminated funding and publishing support for the Metal Gear Solid successor, with the studio ultimately landing a three-month rescue deal with Microsoft-owned Xbox.

In an interview with IGN, Kojima said Sony's decision arrived on a Zoom call with unnamed PlayStation representatives who informed him they "can no longer fund development for Physint." The news, Kojima said, left his mind "blank" to the point that he still struggles to recall specifics of the conversation.

What was at stake?

Kojima Productions had staffed up to work on two projects: the Xbox-published horror title OD and Physint. Kojima framed the immediate arithmetic bluntly to IGN: "I hire according to how many projects we have, and we have two. If we lose one contract, I thought I might have to cut all the people working on Physint, right? Or our studio could end up collapsing because we'll run out of cashflow." Within days, the studio reassigned Physint developers onto OD and disclosed the partner search internally. The company has not laid off any employees.

What financing pressure did Kojima face?

Kojima disclosed that Kojima Productions carried a bank loan taken out sometime after Death Stranding released. He declined to name the lender or terms but framed the stakes of the Sony exit in blunt terms: "If they find out that a project has been stopped or canceled, we'd be in big trouble." The debt detail puts a public name on a funding channel that rarely surfaces in developer interviews.

Who led the search?

The strategy team comprised Kojima, company president Shinji Hirano, and head of talent Aki Saito. The trio chose to pitch Physint to prospective partners as a new intellectual property with potential for film, television, and streaming extensions rather than a project seeking a routine development pact. Kojima said conversations excluded technical support, marketing, organized play testing, and other publisher functions PlayStation had previously absorbed.

Why did Xbox win?

Kojima pointed to shared interest in developing an original property with reach beyond video games as the deciding factor. Microsoft has not publicly disclosed financial terms or scope of the Xbox arrangement.

Why does this matter beyond one studio?

The Kojima episode tracks a wider pattern of publishers withdrawing from signed projects before launch. Microsoft itself has reset its portfolio this year, spinning off four subsidiary studios while starting layoffs totaling roughly 3,200 employees and canceling support for IO Interactive's unnamed fantasy game, a reversal that echoes its 2025 withdrawal from Avalanche Studios' Contraband. The Initiative's Perfect Dark reboot team entered a similar scramble in 2025 after the studio was shuttered and attempted to relocate development to Crystal Dynamics. That effort did not produce a comparable rescue deal.

What should studios watch next?

Three signals are worth tracking. First, whether Kojima Productions discloses the size or remaining term of its bank facility and how that debt now factors into development planning for Physint. Second, the operational and contractual fallout from Microsoft's ongoing restructuring, which now includes a high-profile Japanese partnership while the company sheds roles at scale. Third, the pattern of publishers terminating signed but unannounced projects before launch, a trend that converts development risk into existential risk at mid-sized studios without celebrity-grade leverage.