Xbox Pulls Funding for IO Interactive’s Project Fantasy
Microsoft's Xbox division has withdrawn from its agreement to fund and publish Project Fantasy, the online fantasy RPG currently in development at IO Interactive. The studio, best known for the Hitman series and the recently released 007 First Light, confirmed the news yesterday evening, noting that the end of the relationship with its external partner will result in “staffing decisions” and layoffs.
In a statement, IO Interactive emphasized that the project remains a high priority for the studio. “Project Fantasy is a game, a world, and an IP 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 stated.
A Shift in Xbox Strategy
The move follows a restructuring effort led by new Xbox head Asha Sharma. According to Bloomberg, the decision to pull funding is part of a broader reevaluation of the company's investment priorities. An Xbox spokesperson stated that the division is “taking a fresh look at where we invest so we're focusing on our highest priorities,” noting that while their total investment in game content remains steady, the specific projects they are backing are changing.
This decision arrives amidst reports of wider organizational changes at Microsoft, with potential studio closures and layoffs expected to begin on July 6. The Project Fantasy news is part of a wave of uncertainty hitting several Xbox-affiliated studios.
Project Fantasy's Development History
Project Fantasy has been in active development at IO Interactive since approximately 2021, with a formal announcement following in 2023. Led by IOI co-owner Christian Elverdam, the project had grown to become the studio’s second-largest development team, trailing only 007 First Light.
The setback comes at a moment of high performance for the Copenhagen-based developer. 007 First Light was recently praised as a “narrative tour-de-force” in reviews, selling nearly 3 million copies within its first week on the market. Industry observers suggest that this commercial success provides IO Interactive with a strong position as they look to secure new backing for their fantasy title.
While the immediate future of the development team faces the strain of layoffs, the studio’s chief development officer, Véronique Lallier, previously highlighted the project as a core pillar of the studio's desire to expand beyond its established franchises, describing it as a new IP that the team has been “very excited about.”