Sony has not explained why PlayStation Studios ended its collaboration with Kojima Productions on PHYSINT, but a new market analysis is putting Death Stranding 2: On the Beach under fresh scrutiny.

Rhys Elliott, head of market analysis at Alinea Analytics, argues that the decision can make sense from a strictly financial perspective when viewed alongside estimated sales and revenue for Hideo Kojima’s latest game. His analysis does not establish that Death Stranding 2 caused Sony to walk away from PHYSINT, and neither Sony nor Kojima Productions has made that claim.

The distinction matters because the available figures are estimates, not audited numbers released by Sony.

According to Alinea Analytics, Death Stranding 2 has sold approximately 2.5 million copies across PlayStation and Steam. The firm estimates about 1.8 million units on PlayStation and roughly 700,000 on PC, with combined gross revenue near $170 million.

Those numbers would not make Death Stranding 2 a commercial failure. The question raised by Elliott is whether the return was strong enough for a project of its scale, particularly when Sony would have been considering another ambitious and potentially expensive Kojima production.

Earlier estimates from Alinea had already characterized the sequel’s performance as relatively modest compared with the expectations that can surround a major first-party-backed release. By June 2026, the firm estimated around 1.7 million sales on PS5 and approximately $116 million in gross PlayStation revenue. After the PC release, the combined estimate moved above 2 million units.

Elliott also points to unofficial production-cost estimates when considering Sony’s possible risk calculation.

Industry estimates have placed the first Death Stranding near a $100 million production budget, while some estimates for Death Stranding 2 range from roughly $150 million to $200 million. Sony and Kojima Productions have not disclosed official budgets for either game, so those figures should be treated as estimates rather than established costs.

Marketing, distribution, platform fees and other expenses make a simple comparison between gross game revenue and development budget incomplete. A project can recover its investment and still deliver a return that a large publisher considers less attractive than alternative uses of the same capital.

That is the basis of the financial argument, not proof of Sony’s reasoning.

The timing is what makes the discussion harder to ignore.

Hideo Kojima said Kojima Productions unexpectedly received notice from PlayStation Studios in mid-June 2026 that Sony would cancel the PHYSINT project under their collaboration. Kojima said PHYSINT was important both to him personally and to his studio, prompting a roughly three-month search for another partner.

Xbox ultimately became that partner and will now publish PHYSINT.

The mid-June timing overlaps with the period when updated market estimates were showing Death Stranding 2 settling into a more moderate commercial trajectory. That coincidence does not demonstrate cause and effect, but it is why the financial theory has gained attention.

Sony’s own public statement did not cite sales, budgets or profitability. PlayStation Studios said only that, after careful consideration, it had made the difficult decision to step away from collaborating with Kojima Productions on PHYSINT. The company also said it continued to admire Kojima’s vision and described their broader relationship as strong.

That wording leaves room for multiple possible explanations, including budget priorities, portfolio strategy, production risk or other internal considerations that have not been disclosed.

Death Stranding 2 itself remains a major Sony-published release. The game launched on PlayStation 5 on June 26, 2025, and PlayStation’s official page now lists both PS5 and PC versions. Kojima Productions developed the sequel, with Sony Interactive Entertainment publishing the PlayStation release.

PHYSINT, meanwhile, is a separate project with a different creative goal. Kojima has described it as a next-generation action-espionage game intended to blend video game production with cinematic talent and technology. That ambition also makes assumptions about its eventual budget tempting, but no official development cost has been announced.

For now, the strongest conclusion is therefore narrower than the headline speculation surrounding the story.

Death Stranding 2’s estimated performance provides a plausible financial context for Sony’s decision, especially given the timing, but there is no evidence proving that its sales caused PlayStation to cancel the PHYSINT collaboration.

What is confirmed is that Sony ended its involvement, Kojima Productions chose to keep PHYSINT alive, and Xbox has taken over as the project’s publishing partner.

Death Stranding 2: On the Beach – Final Trailer | PS5 Games

ARTICLE CREDIT:

News story written by Mike Lima.

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Primary source/reference link: https://x.com/superhys/status/2098098655613817142