Source confirmed: https://www.bloomberg.com/news/articles/2026-09-11/hideo-kojima-s-physint-video-game-dropped-by-playstation-goes-to-xbox
TLDR: Sony cited three reasons, Death Stranding 1 and 2 missing revenue targets, Physint missing deadlines and trending over budget, and reluctance to fund another game that wouldn't stay a permanent exclusive.
My take: Kojima wanted hundreds of millions while keeping the IP for himself. A classic "I want the bag but you take the risk," fair to say that gave Sony cold feet. So Sony canned the game over budget concerns and "not permanently exclusive." But this is also the same company that dumped hundreds of millions into Concord, a game with a lifespan shorter than a common housefly.








