Sony dropped Physint due to budget, Death Stranding sales, and relationship with Hideo Kojima himself - Bloomberg

According to Bloomberg, citing people familiar with the situation, the main reasons for the termination of the relationship between PlayStation and Kojima Productions were Sony's concerns about Physint's budget, its potential profitability, and exclusivity terms.

One of the key factors, according to the publication's sources, was the commercial results of Kojima's recent games. Neither Death Stranding nor its sequel Death Stranding 2 met PlayStation's financial expectations. At the same time, Physint faced its own problems: development allegedly fell behind schedule, and costs were already threatening to significantly exceed the initial budget, despite several years remaining until release.

An additional problem for Sony was the cooperation model with Kojima itself. The company was not prepared to invest hundreds of millions of dollars in a new project that ultimately would not remain a permanent PlayStation exclusive. Both parts of Death Stranding were initially released on Sony consoles, but later appeared on other platforms. Moreover, the rights to the franchise belong to Kojima Productions itself, not Sony.