IO Interactive regains full ownership of Project Fantasy following end of Xbox deal, shuts down Istanbul studio and lays off developers “to find a new balance”

After Xbox ended its funding and publishing deal for Project Fantasy, IO Interactive announced on July 7th that it has regained full ownership of the online fantasy RPG project. While the developer says it remains committed to developing the game independently with internal funding, the split has forced significant restructuring.

IO Interactive is closing its Istanbul studio and laying off an unspecified number of developers as part of what the company describes as necessary adjustments to “find a new balance” for the studio’s long-term future. The company stated these decisions were made to “retain the long-term future of IOI as one of the very few fully independent AAA developers and publishers.”

The Hitman and 007: First Light developer had been working on Project Fantasy for years with partial Xbox funding. The game was announced in 2023 as an ambitious online RPG project. IO Interactive emphasized that the project itself is not being cancelled and that the company remains “100% committed” to seeing it reach completion.

The studio’s restructuring is part of broader fallout from Microsoft’s major reorganization, which has resulted in over 3,200 layoffs across the company and the cancellation or redirection of various external partnerships. IO Interactive described the changes as “hard, but necessary decisions” required to maintain its independence and focus on its core internal titles alongside Project Fantasy’s continued development.

IO Interactive regains full ownership of Project Fantasy following end of Xbox deal, shuts down Istanbul studio and lays off developers “to find a new balance”

Sources