IO Interactive, the studio behind Hitman and the upcoming 007 First Light, has officially confirmed that it has regained full ownership of its online RPG, Project Fantasy. The developer will now fund and manage the title independently following the end of its external finance partnership with Xbox.
The announcement follows a turbulent week for the studio. While IO Interactive did not explicitly name Xbox as the partner in its initial statement, Bloomberg reports that Microsoft pulled funding for the project. This decision comes amidst a massive wave of layoffs at Xbox, which is cutting 3,200 positions throughout fiscal year 2027. IO Interactive acknowledged that the loss of this external funding has necessitated difficult internal changes, including the closure of its Istanbul studio and the departure of several staff members.
A Shift Toward Independence
In a statement released to the community, IO Interactive characterized these decisions as hard but necessary to ensure the studio's future as a fully independent AAA developer and publisher. The company is currently prioritizing the support of affected colleagues, and it has requested that the industry offer assistance to those impacted by the layoffs.
"With this context, we had to find a new balance for the long-term future of the studio, focused on the success of our main internal core titles instead of external projects and potential mobile game derivatives," the studio stated. Despite these structural changes, IO Interactive remains fully committed to Project Fantasy, noting that the project will now move forward under the studio's own direction and passion.
The Future of Project Fantasy
First announced in 2023, Project Fantasy was teased by IO as a "journey unlike any we have been on before." While the studio has not provided a new release window, it confirmed that none of its publicly announced first-party projects have been cancelled despite the recent staffing reductions. CEO Asha Sharma reiterated that the studio is eager to share more about the game in the future, providing the IP with what they describe as the "best possible foundation to succeed."
The situation at IO Interactive mirrors a broader trend of Xbox parting ways with several studios, including Psychonauts developer Double Fine and South of Midnight creator Compulsion Games, as Microsoft looks to focus on its strongest franchises.