IO Interactive is laying off staff after losing the external partner backing Project Fantasy, the Hitman and 007 First Light studio’s in-development fantasy RPG. The studio did not name that partner in its statement, but Bloomberg’s Jason Schreier reported, and Microsoft has since confirmed, that it was XBOX, which pulled its funding for the project.
In a statement to the gaming community, IO leaned on its recent run of good news, including the warm reception for its young, unproven take on James Bond, before turning to the harder part. It said the end of the partnership forces it to adapt to a new reality with short-term consequences, including the staffing decisions happening now, and that it is committed to supporting those affected. The studio did not say how many jobs are involved. More importantly, IO owns Project Fantasy outright, so losing a publisher is not the same as losing the game.
Project Fantasy’s XBOX connection goes back years, which makes the timing of all this hard to ignore. The game was tied to Microsoft as far back as the 2023 FTC trial leaks that listed it as an XBOX exclusive, and Microsoft framed pulling out as part of taking a fresh look at where it invests and focusing on its highest priorities. That decision lands in the middle of a heavy stretch of cuts at XBOX, which is deep into a self-described Reset under new leadership, with major layoffs expected as the fiscal year closes on top of the Game Pass changes and studio closures already behind it. With its old publisher gone and its exclusivity off the table, Project Fantasy now has to find new backing, and IO says it intends to see the project through one way or another.
