There certainly comes a point where your legacy can only carry so much.

I do feel like its release schedule played a big part in Sony wanting to stop funding/publishing this title. This project was initially revealed in a 2024 SoP. But OD doesn't even have a release date yet. Maybe Fall/Holiday 2027 is the best case? I don't think its a stretch to say Physint could very well be a late PS6 title. It might have been more digestible for Sony if Death Stranding got the returns that God of War, Horizon or Ghost did. 

Not to mention it will be digital only so many enthusiasts shouldn't care about it anyway lol. /s 

Ultimately, like the Bluepoint closure, the pullback on PC releases, the mass live-service push, the discontinuation of physical games, and now the abandonment of Kojima, it's just a spreadsheet decision. The June cancellation of Physint also lines up with Bungie pulling the plug on Destiny 2 and all future content for the game.

Sony's made it clear they're not interested in pushing hardware anymore this gen. They're focusing on monetizing the playerbase. You can't do that if you're sending an insane amount of money over the course of years in every direction.

Sony's focus is on ball-and-gun gamers and other black hole live service games like Roblox. And of course GTA 6, and the eventuality of GTA 6 Online. That's where the most money is, and that's who they want to focus on at this time.

We are looking at the real possibility that devs and publishers are quite chummy with Switch 2 and the Xbox ecosystem (Helix, PCs in general with Xbox users) and feel cold to PlayStation in comparison. A lot of publishers at first supported Xbox 360 more than PS3 and some of them even gave Wii similar or better support than PS3.
Any potential disappointing sales of PS6 or growing pains we see will likely be self-inflicted by Sony.
Kojima seems like the guy you want to keep working with, and not cancel a partnership to cut corners.

Let's be real now. 

That's not even in the realm of possibility. Its the sort of prevailing sentiment you would find in enthusiast forums but not backed by actual data. The biggest game of all time is being marketed with PS5 gameplay and features. There are recent game announcements that literally just skipped the Xbox platforms. Switch 2 is getting late ports of many third party titles. No major third party publisher will be skipping PlayStation. 

And wouldn't Microsoft's most recent round of layoffs/spinoffs be received even more unfavorably than Sony stopping funding of Physint? I'm really not sure why this would sour any relations with PlayStation partners in the first place.

Death Stranding was not a major hit for SONY to be fair and they let Kojima spend whatever he wanted. I'm sure they're weary now especially with his lofty goals with this new game.

A rare Xbox W. Don't get too many of those nowadays.

Not a big fan of Kojima's games personally, but he's certainly a popular auteur so saving his game is a good look, while Sony backing out of it does look especially bad given that Kojima's works have been an iconic part of the PS brand since the 90s.

It might make sense from a spreadsheet POV, but the PR angle's not flattering.

Sony has become absolutely despicable. That said, as someone whose main platform is PC and who isn't intending to get any more PlayStation consoles and who also like's Kojima's games, this is in practice very much to my advantage. Kojima's games are one of the things that could have encouraged me to get a PlayStation the most, and now that's gone. I had some concerns I'd end up getting the next PlayStation anyway due to some games, but at this point there's not much left for me.

Sony has just been making one bad move after another lately However, I get the impression that the Kojima name generates a lot of buzz but doesn't translate into sales.

Kojima's games try to be like movies, where you spend most of time watching the cinematics instead of actual gameplay. But sometimes he adds too much useless stuff into his games.

See Death Stranding... You have a button to walk, a button to sprint, a button to STOP sprinting, a button to take stuff in your left hand, a button to take stuff in your right hand... Heck, you even need to focus on building new shoes because yours get ruined after walking for a while. Also, why do I have the option to pee again? No, thanks, just give me casual 1+1=2 gameplay and this game would be soo much better. I like it, but yeah, gameplay feels too busy.

But cinematics and story-wise, it's an amazing experience.

In a game about movement, you've got to make movement interesting. Notice how movement in Kojima's other games is simpler.

I think that pee thing is nice for the giggles and maybe something you might want to do every now and then. It doesn't really do much, if anything, but it's a nice little detail that gives the game a bit more personality. One of the things that's special about Kojima's games is the amount of little details like that you can find in them. There's probably very few games that wouldn't benefit from such details, because they add some personality.