Microsoft Takes Over Funding for Kojima’s Physint After Sony Exit

The relationship between Hideo Kojima and Sony Interactive Entertainment spans nearly three decades, beginning with the impact of *Metal Gear Solid* on the original PlayStation. Kojima created the *Metal Gear* series while at Konami Group Corp., and the 1998 release became a critical and commercial benchmark through its cinematic storytelling and stealth-action mechanics, helping solidify PlayStation’s dominance in the global home console market.

After a public fallout with Konami in December 2015, following the release of *Metal Gear Solid V: The Phantom Pain*, Kojima re-established Kojima Productions as an independent entity. Sony backed the newly independent studio with proprietary development technology, including Guerrilla Games’ Decima engine, and provided full publishing support for *Death Stranding*.

That publishing relationship later produced the original *Death Stranding*, released in 2019 and reaching more than 20 million players globally across console, PC, and subscription services. Its 2025 sequel, *Death Stranding 2: On the Beach*, registered more than two million copies sold on PC following its release on that platform. Despite those totals, internal revenue metrics at Sony fell short of multi-year corporate targets, driven in part by Kojima Productions expanding distribution beyond PlayStation hardware.

**REDMOND, Wash.** — Microsoft’s Xbox gaming division has reached a multi-project publishing deal with Kojima Productions to fund and distribute the Japanese studio’s upcoming development slate. The arrangement includes the action-espionage title codenamed *Physint*, after Sony Interactive Entertainment decided to end its project-funding partnership with the developer.

Kojima spent three months seeking new financial backing after Sony moved to cancel its involvement with *Physint*. Microsoft will provide development capital and publishing infrastructure for that game, the cloud-focused horror project *OD*, and additional unannounced titles currently in production at the Tokyo-based independent studio.

*Physint* was unveiled in early 2024 as an action-espionage title that blends interactive gameplay with digital filmmaking techniques. Kojima has envisioned it as a spiritual successor to his work on the *Metal Gear* series, but the game remains several years away from release. Full production is continuing under Microsoft’s funding pipeline.

Sony’s exit reflects broader financial discipline and risk management across PlayStation’s first- and third-party development portfolio. People familiar with the decision said Sony Interactive Entertainment executives became concerned about *Physint*’s projected multi-year development timeline, potential budget overruns, and the likelihood that the title would eventually be ported to competing platforms, limiting its long-term value as a PlayStation exclusive.

The publisher’s strategic pivot followed an assessment of the commercial performance of Kojima’s previous titles funded under the PlayStation umbrella. Microsoft’s acquisition of the publishing rights for Kojima’s project slate also comes as development costs rise across the interactive entertainment industry. Budgets for high-end AAA video games now regularly exceed $200 million, while development cycles routinely extend between five and seven years.

Those expenditures have forced major platform holders to re-evaluate traditional exclusivity arrangements against prospective returns on investment. Representing Xbox, Microsoft executives stated that the company was honored to partner with Kojima Productions, citing the studio’s influential legacy in narrative and genre design. Sony Interactive Entertainment characterized its decision to end project funding as difficult while indicating a desire to maintain broader corporate relations with the studio.