Shortly after Xbox disclosed intentions to reduce its workforce by thousands and divest from several studios, one of its publishing collaborators has announced its own staff reductions. IO Interactive, known for the Hitman series and the upcoming 007: First Light featuring James Bond, announced the closure of its Istanbul studio along with layoffs affecting an undetermined number of staff. According to the publisher, this action comes after the termination of external funding for its fantasy RPG titled Project Fantasy, which has been in development for an extended period.

IO Interactive Verifies Termination of Project Fantasy Financing

In a post on X, IO Interactive stated that the external financing deal for Project Fantasy concluded, allowing the studio to reclaim complete control over the project and its intellectual property. Although the partner was not named directly, earlier reports indicated Xbox was providing funding for the online fantasy RPG.

Microsoft's gaming unit seems to have pulled back support for Project Fantasy, yet neither Microsoft nor IO Interactive has verified if this ties directly to Xbox's wider restructuring initiatives.

The complete statement follows:

Dear gaming community,
After our external finance partnership on Project Fantasy ended, IOI has taken back full ownership of the project and our IP. We will keep developing and funding it on our own along with our other projects. Given this situation, we needed to establish a new equilibrium for the studio's long-term future, emphasizing our core internal titles rather than external projects or possible mobile game spin-offs. This involved implementing adjustments and proposed adjustments across our studios: closing our Istanbul studio and beginning procedures to separate from colleagues who have contributed significantly to IOI's identity.
Our priority right now is assisting those impacted as effectively as possible during this time. If you know of any openings in your network, we would appreciate any help you can provide to the skilled individuals at IOI seeking new roles.
These choices are difficult yet essential to secure IO Interactive's long-term viability as one of the rare fully independent AAA developer-publishers, and to provide Project Fantasy with the strongest base for success through our own dedication and vision. Project Fantasy represents a game, universe, and IP we are fully devoted to, and we are eager to reveal it to you.

Future Plans

Nevertheless, work on the game is set to proceed. IO Interactive highlighted its commitment to advancing Project Fantasy independently while supporting it with its current game lineup. The studio noted that losing external funds necessitated a readjustment of its long-term business approach.

In the restructuring, IO Interactive will close the Istanbul studio and start parting ways with employees across the company. The number of positions impacted was not specified. After the closure, operations will continue from the Copenhagen headquarters, as well as locations in Barcelona, Spain; Brighton, UK; and Malmö, Sweden.

The Hitman creator called these moves "hard, but necessary" to preserve "the long-term future of IO Interactive as one of the very few fully independent AAA developer and publisher."

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This news arrives soon after Xbox announced what it termed the biggest restructuring in its history. Microsoft intends to cut approximately 3,200 positions within Xbox by fiscal year 2027. Xbox CEO Asha Sharma pointed to an unhealthy gaming sector, Game Pass growth falling short of expectations, increasing operational expenses, and a tough hardware market as factors driving the planned reductions.