Despite losing a major backer, IO Interactive remains committed to releasing its original fantasy RPG. 

More disappointing news has emerged involving giant tech company, Microsoft. Following reports of imminent studio closures and layoffs across Xbox, IO Interactive–the developer behind the critically acclaimed 007: First Light–has confirmed that "an external partner" has withdrawn from its publishing agreement for the studio's upcoming fantasy RPG, codenamed Project Fantasy. Although IO Interactive did not name the partner explicitly, Bloomberg reports that the partner is, in fact, Xbox.

The loss of a major publishing partner has forced IO Interactive to deal with "short-term consequences", including "staffing decisions", indicating layoffs at the studio. Despite the setback, however, IO Interactive reaffirmed its commitment to Project Fantasy, promising that its original IP will still see the light of day.

The full statement from IO Interactive's LinkedIn reads as follows:

"Dear gaming community,

For a good while, it has been all positive news from IO Interactive. We remain humbled and honoured 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.

A relationship with an external partner on our own IP, 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 IP that we absolutely love and remain 100% committed to, now and in the future. This wonderful universe will see the light of day."

Why did Xbox leave IO Interactive's Project Fantasy?

Xbox has clarified that it is not reducing its overall investment in games, but is instead shifting where it allocates its funding. An Xbox spokesperson told Bloomberg (via GamesRadar):

"We're not reducing our overall investment in games. 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."

While Microsoft did not explain why it ended the partnership, the statement suggests the move is part of a broader shift in the company's investment strategy, rather than an overall reduction in gaming spending.

What is Project Fantasy?

Project Fantasy was announced in February 2023 as IO Interactive's sixth original IP and its first online fantasy RPG. Very little has been revealed since, with only a single piece of concept art shared at the time of its announcement.

Despite the lack of updates, the project has attracted significant attention thanks to IO Interactive's pedigree as the studio behind the iconic Hitman series and the recently successful 007: First Light, which sold 2.7 million copies during its launch week.