Hitman and 007 First Light developer IO Interactive has confirmed that it has "regained full ownership" of its upcoming online RPG, Project Fantasy, with plans to continue development "and fund it independently amongst our other projects" after Xbox reportedly pulled funding from it.
Last week, IO Interactive announced that "a relationship with an external partner on our own IP, Project Fantasy, has come to an end," and although the company said it'd "remain 100% committed" to the IP, there would be "short-term consequences, including staffing decisions." At the time, Bloomberg reported that it was Xbox that had pulled out of a deal to fund and publish the game – a claim IO Interactive didn't publicly confirm, but would hardly be surprising given yesterday's news of 3,200 Xbox employees getting laid off throughout fiscal year 2027.
Today, a statement from IO Interactive acknowledges the "end of our external finance partnership on Project Fantasy," adding that the company "has regained full ownership of the project and our IP. We will continue to develop and fund it independently amongst our other projects."
It explains: "With this context, we had to find a new balance for the long-term future of the studio, focused on the success of our main internal core titles instead of external projects and potential mobile game derivatives. This has meant making changes as well as proposed changes across our studios: the closure of our Istanbul studio and starting a process to part ways with colleagues who have been a meaningful part of what makes IOI what it is."
Dear gaming community, Following the end of our external finance partnership on Project Fantasy, IOI has regained full ownership of the project and our IP. We will continue to develop and fund it independently amongst our other projects. With this context, we had to find a new…July 7, 2026
IO's "immediate focus is on supporting those affected as best we can through this period," it says, noting that it'd be thankful for any job opportunities and support that can be offered to any of the staff affected.
Furthermore, it calls its decisions "hard, but necessary" to "retain the long-term future of IO Interactive as one of the very few fully independent AAA" developer and publishers, in addition to giving "Project Fantasy the best possible foundation to succeed under our own passion and direction." It reiterates its commitment to the IP, noting that "we cannot wait to share the love with you."
Project Fantasy was first announced back in 2023, at which time IO teased that "it feels familiar, yet at the same time IOI is going on a journey unlike any we have been on before."
While yesterday's Xbox layoff news is undeniably devastating, one silver lining – per CEO Asha Sharma – is that "none of our first party publicly announced games or projects are being cancelled as part of these reductions." Several studios are parting ways with Xbox, however, with Psychonauts developer Double Fine and South of Midnight studio Compulsion Games both going independent.
