IO Interactive Faces Layoffs After Xbox Ends Partnership For Its Upcoming Online RPG Project Fantasy
In 2023, Hitman and 007 First Light developer IO Interactive announced a surprising new IP, an online RPG codenamed Project Fantasy. While that game is still on the way, it has hit a snag that will result in layoffs.
IO posted an update on the game, stating that “A relationship with an external partner on our own IP, Project Fantasy, has come to an end. This means we have to adapt to this new reality and its short-term consequences, including staffing decisions, which is what is happening as we write this update, and we are fully committed to supporting those affected through this challenging transition.”
Bloomberg has reported that Xbox confirmed to the outlet that it was the “external partner” funding the project and that it has pulled out of the relationship as it re-evaluates its investments. An Xbox spokesperson told Bloomberg that despite the news, the company is not investing less in video games, but rather plans to invest the same amount as it did last year. “What’s changing is where we’re investing and the kinds of projects we’re backing,” said the spokesperson.
Despite this setback, IO remains committed to continuing work on Project Fantasy, writing that it is “a game, a world, and an IP that we absolutely love and remain 100% committed to, now and in the future. This wonderful universe will see the light of day.”
Dear gaming community,
For a good while, it has been all positive news from IO Interactive. We remain humbled and honored by the response to our latest outing with a young, unproven Bond. A bold new story and a take on one of the most famous characters in entertainment, which…
— IO Interactive (@IOInteractive) June 30, 2026
Project Fantasy was revealed in February 2023. At the time IO wrote of the game that it is “A world and a game built from the core to entertain players and expand for many years to come. It feels familiar, yet at the same time IOI is going on a journey unlike any we have been on before.”
“For many, this journey is also a deeply personal one that began long before we started making games for a living – and it started with the fantasy genre,” IO wrote in Project Fantasy’s announcement post. “From the “Fighting Fantasy” books compelling you to choose your path, alone, against wizards, lizards, and thief kings. To the togetherness, camaraderie, agony, and delight found around the tabletop. For some it meant taking the role of a game master: Part storyteller, part AI opponent, part guide, part villain. For everyone around that table it meant creativity, imagination, building a world together, and a shared goal in creating a great game experience.”
Earlier this year, IO released 007 First Light to positive reviews and strong sales. You can read our review of that game here.
