Large-scale layoffs are widely expected at Xbox soon, and funding decisions at the company are already costing game developers their jobs. Xbox has pulled funding from Project Fantasy, the upcoming new IP from Hitman and 007 First Light developer IO Interactive. While IOI says it remains committed to the new game, the funding cut will mean layoffs at the studio.
"A relationship with an external partner on our own IP, Project Fantasy, has come to an end," IO Interactive says in its announcement. "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."
While IO Interactive did not specifically name Xbox as the partner involved with Project Fantasy, a spokesperson for Microsoft's gaming brand confirmed it in a statement to Bloomberg. "We're not reducing our overall investment in games," the spokesperson says. "We expect to invest about the same in content as we did last year. What's changing is where we're investing and the kinds of projects we're backing."
Xbox had apparently been set to publish Project Fantasy. The game, which was initially described as a "bold new online fantasy RPG," was first announced in 2023, but few details on it have come since. Today's news comes a month after the launch of 007 First Light, a game which launched to broad acclaim and strong sales, though the future of the series seems to be something of an open question given recent comments from James Bond IP holder Amazon MGM.
Regardless, IO Interactive says it's still going to finish its RPG. "Project Fantasy is a game, a world, and an IP that we absolutely love and remain 100% committed to, now and in the future," its statement insists. "This wonderful universe will see the light of day."
Major changes at Xbox have been expected since June 10, when a message from Xbox CEO Asha Sharma and chief content officer Matt Booty ominously warned of an impending "reset." Some studios may be sold to external buyers, or shut down entirely. Double Fine, Ninja Theory, and Compulsion Games have all reportedly been on the chopping block, and a new report suggests that Dishonored developer Arkane, which is currently making Marvel's Blade, is also among the studios at risk. Multiple reports indicate that Xbox's layoffs will begin on July 6.
