In a nutshell

• IO Interactive has announced layoffs after Xbox pulled out of publishing Project Fantasy.
• Microsoft confirmed it was the external partner, citing a shift in investment priorities.
• Despite setbacks, IO says it remains committed to Project Fantasy as its own IP.

IO Interactive, the studio behind Hitman and the James Bond game 007 First Light, has announced layoffs following the end of its partnership with Xbox Game Studios on Project Fantasy.

Xbox Confirms Exit

According to Bloomberg, Microsoft confirmed it was the publishing partner for the upcoming title, originally revealed in February 2023. While the company insists it is not reducing overall investment in games, Xbox CEO Asha Sharma has signaled a “reset” in priorities, focusing on different types of projects amid wider restructuring.

IO Interactive’s Statement

In a message to fans, the studio expressed disappointment but reaffirmed its commitment to Project Fantasy:

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 the world has embraced with love.

However, today we have to share some more downbeat news. A relationship with an external partner on our own [intellectual property], 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.

Project Fantasy is a game, a world, and an [intellectual property] that we absolutely love and remain 100 [percent] committed to, now and in the future. This wonderful universe will see the light of day.

The studio acknowledged that staffing decisions were unavoidable due to the sudden change and pledged to support affected employees during the transition.

Wider Xbox Restructuring

The layoffs at IO come as Xbox prepares to announce its own wave of cuts starting next week, with at least five studios reportedly at risk of closure or spinoffs. This marks one of the most turbulent periods for Microsoft’s gaming division, with projects like Blade and State of Decay 3 also facing uncertainty.