Gaming has seen a rough 2026, with Xbox’s “reset” laying off over 3,000 creators, while PlayStation has also alienated everyone through their internal decision-making. Beyond the baffling choices to stop physical disc production by 2028, PlayStation has cut ties with several groups once under its umbrella, including the talented team at Japan Studio. This group was responsible for innovative titles like The Last Guardian and Shadow of the Colossus, but this did not prevent their shutdown under PlayStation, a move that some have unique insight on.
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Past comments from Sony Interactive Entertainment’s former president Shuhei Yoshida have said that Japan Studio’s shutdown back in 2021 was because they didn’t “drive console sales.” Players have been questioning this decision for nearly half a decade, leading to further comments by Yoshida at the Computer Entertainment Developers Conference in 2026. During a keynote speech at this event, translations have revealed more reasons why Japan Studio’s shutdown occurred, at least in more of Yoshida’s words.
Former Sony President Claims That Japan Studio Closure Was Due To Industry Shifts From AA To AAA Games
Yoshida’s remarks at the Developers Conference were somewhat in response to players who had been consistently asking him about the Japan Studio shutdown since it happened. Yoshida said that Japan Studio “released loads of games, creative games,” a point that is a bit of an understatement when you consider how influential that group was to the direction of gaming as a whole. For example, Gravity Rush, Astro Bot, and Shadow of the Colossus are all praised games for completely different reasons, meaning that “creative” is a bit of an undersell.
Japan Studio was apparently shutdown because “we [PlayStation] were slowly shifting to AAA on the PS4 and PS5, and sometimes it’s difficult to scale up like that,” according to Yoshida. This was after Yoshida said “while they [Japan Studio] came up with a lot of creative ideas, the games they made weren’t big in scale.” This ties into how Japan Studio’s games were not huge AAA experiences like Uncharted, The Last of Us, or God of War (2018), at least from PlayStation and Sony’s viewpoint.
With all the current outrage over Sony’s physical disc choices, this perspective on Japan Studio’s role isn’t the least bit surprising. PlayStation has valued demand and hardware sales about creativity for a long time, so these quotes from Yoshida from when he was at Sony are reflective of that mindset. Yoshida would later go on to say “What we call AA games are a perfect fit for the PlayStation Vita,” the handheld console the company had at the time. This implies that PlayStation viewed the smaller scope of Japan Studio’s games weren’t suitable for their mainline consoles in circulation.
Yoshida also said that “It’s hard for Japan Studio to launch a new series on console,” further emphasizing that point. As the event concluded, Yoshida would later encourage people to check out the projects of former Japan Studio creatives, including games like Slitterhead or Ratatan. Closing thoughts by Yoshida suggested that many of the projects from Japan Studio have had a better chance at getting green lit elsewhere following their shutdown, at places where scope and scale didn’t clash.
Smaller Games Are In Much Higher Demand Following Sony & PlayStation’s Decision To Close Japan Studios
At the time, there may have been an argument for PlayStation’s shift to AAA games, especially considering the following success of their exclusive titles of that scale later. However, recent years have seen a rise in AA games, with players much more interested in projects with solid gameplay and engaging systems rather than big-budget graphics or over-polished open worlds with nothing in them. Titles like Clair Obscur: Expedition 33, Hollow Knight: Silksong, and Blue Prince performed well, with vast critical acclaim too.
Ironically, some of these games reflect titles like Shadow of the Colossus from Japan Studio, with a smaller-scale title gaining mass appeal through its tight direction and creative ideas. Huge impairment losses at Sony for Destiny 2, millions of dollars sunk into failures like Concord, and fumbled live service projects have cost PlayStation time and again, in an era where having creative ideas in their library could have helped. Today, it would be easy to see Japan Studio launch a game on the PS5 with fans likely welcoming a AA game.
Players have long wanted the PS5 to have a larger library to justify the console’s cost, but the oversaturation of AAA games has led to low sales of the device compared to past PlayStation units. With rising costs of games reaching up to $80 as well, players are demanding smaller experiences more than ever. This shows how the reason behind Japan Studio’s shutdown may have been short-sighted, but given PlayStation and Sony’s typical business-first decisions, the choice was inevitable.
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