Sony is stepping away from a lot of things it seems. Maybe too many things.

What is the relationship like between Konami and PS vs Konami and XB?
PHYSINT is supposedly a MGS type game being made by Kojima and backed by PS correct?

What if PHYSINT is about close as you could legally get to 'Snake in a different box'?

What if Konami knows, is being told, or is just assuming that PHYSINT is truly amazing, and that it's likely going to steal a lot of MGS fans away?
What if Konami told PS that they weren't ok with this and that it would hurt their business relationship going forward if PS keeps backing PHYSINT?

This could be the reason why DS/DS2 wasn't a problem, and why PS makes it sound like they're open to working with Kojima in the future on other IP.
The problem might be Konami isn't happy about what Kojima is cooking up with PHYSINT.

Just as we figured, Schreier's reporting that Physint was going to be going over budget and was missing deadlines. Sony also didn't like that it wouldn't be a permanently exclusive title.

We thought MGS4 had long cutscenes lol. But Schreier mentions, "Business in Japan is all about relationships, and some of the PlayStation executives who have worked closest with Kojima over the last few decades are no longer at the company"

It's also a case of different leadership not willing to put up with an ego like that of Kojima.

The number of spreadsheet decision-making Sony's been doing lately reminds me a lot of the last couple of years of Phil Spencer's tenure at Xbox. The big difference is that PlayStation is just such a large brand that it can mostly absorb the negative PR. How long that lasts, who knows.

But you don't get into bed with Kojima, for a decade now, thinking that you're gonna get a mammoth hit. When it comes to their single-player stuff, Sony's been mostly risk-averse for years now. Wolverine, being the latest in that mix, is almost their worst yet in that specific regard. In a world where we all complain that AAA gaming is the same and safe, credit where credit is due, Kojima is still out here making weird ass experimental games at a AAA level. Which is something the gaming industry is sorely lacking these days.

It's kinda funny how NOW a lot of people are concerned about things like ROI when for years, many of us were praising how huge gaming budgets were getting because we thought it screamed quality.

I have no idea how Physint, or even OD, is gonna turn out, but knowing that Kojima is returning to the genre that he helped define rather than something more niche like Death Stranding, that still makes for a very exciting proposition. The fact that he wants to get a movie studio involved means cutscenes are probably gonna take hours lol, but at this point in his career, this is probably the closest he's gonna get to making an actual film.

For Xbox, this was first and foremost, a great credibility play in helping rebuild the platform's image.

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.

Not to mention Death Stranding 2 was a huge drop in sales from the first game on top of that, probably because once was enough for people to have their fill of "strand-type" games. 

Sony doesn't seem to be in the wrong on this one. Honestly they spoiled Kojima more than enough.

Except this isn’t just any Hideo Kojima game they let go, this is an action-espionage game, a Metal Gear spiritual successor we’re talking about here, his bread and butter. But sure, continue to fund live service slop. 

BTW, how many first party games have they released this gen? I can probably count with my fingers.

Are they trying to turn people away to their competition (they don’t really consider Nintendo competition)? It sure seems like it. Or they’re arrogant enough to think nothing they do can backfire on them, you know, kinda like when they released the PS3 at $600 a couple of gens ago.

Schreier went a bit further, saying this is part of a much bigger, more rigorous initiative within Sony to avoid another Concord.

So who knows, if it wasn't for Concord, they may have been more accepting of Kojima's ambitions on Physint. But because Concord did happen, they've got a much tighter noose on all of their internal projects. The most publicly known things that happened in June were Bungie suddenly canceling all future Destiny 2 content putting the franchise on ice, and now we know of Kojima's cancellation of Physint.  

Seriously, Xbox getting both the next Hideo Kojima horror game in tandem with a Hollywood horror icon (Jordan Peele this time) and spiritual successor to Metal Gear after his fallout with Konami after MGS5 and PT was not on my Bingo card.