IO Interactive Faces Layoffs After Xbox Reportedly Ends Project Fantasy Partnership
IO Interactive, the Danish studio best known for the Hitman franchise, is facing layoffs despite recently enjoying major success with 007: First Light. The James Bond game has reportedly delivered an impressive commercial and critical performance, selling 1.5 million copies in its first day and reaching 3 million sales within two weeks. It has also earned strong reviews, including an 84/100 Metascore and a 90% positive rating on Steam.
However, the studio’s momentum has been disrupted by the end of a major external partnership tied to Project Fantasy, IO Interactive’s upcoming original IP. The game was planned as an online RPG and had been one of the studio’s most ambitious projects outside the Hitman and Bond universes.
According to reports, Microsoft’s Xbox division ended its funding and publishing agreement for Project Fantasy on June 30. With that partnership no longer in place, IO Interactive has been forced to reassess its short-term plans, including staffing levels.
In a public statement, IO Interactive acknowledged that the news comes after a period of positive attention for the studio. The company said it was grateful for the reception to its new take on James Bond and the support from players. However, it confirmed that a relationship with an external partner on Project Fantasy had come to an end, creating immediate consequences for the business.
The studio said it is now adapting to the new situation and that staffing decisions are part of that process. IO Interactive also emphasized that it is committed to supporting employees affected by the layoffs during the transition.
Despite the setback, the developer made it clear that Project Fantasy has not been canceled. IO Interactive described the game as a world and IP it deeply believes in, stating that it remains fully committed to bringing the project to players in the future.
The reported split comes as Xbox is said to be reevaluating its spending and investment strategy across its gaming business. A spokesperson for the company said Xbox is taking a fresh look at where it invests and is focusing on its highest priorities.
The situation at IO Interactive may be part of a broader shift within Microsoft’s gaming division. Reports suggest that Xbox could be preparing for larger internal changes, with additional layoffs expected in the coming months.
For IO Interactive, the timing is especially difficult. The studio has proven it can deliver polished, high-profile games with global appeal, and the success of 007: First Light shows there is strong demand for its work. Still, the loss of a major publishing and funding partner for Project Fantasy has created a serious challenge.
Fans will now be watching closely to see how IO Interactive moves forward. While layoffs are a painful development, the studio’s continued commitment to Project Fantasy suggests the project still has a future, even if its path to release may now look very different.
