While many studios within Xbox have been affected by its recent company-wide layoffs, even third-party studios don’t seem to have escaped unscathed. IO Interactive had recently confirmed that its deal with an “external partner” that would fund the development of Project Fantasy had fallen through. In a new statement, the studio has confirmed that, due to this, the 007 First Light developer is being hit with layoffs of its own.
IO Interactive has noted that it has regained full ownership of Project Fantasy, however, and that it plans to continue development. However, the funding being cut off means that its Istanbul studio is being shut down, with all of its employees being laid off. While the precise number of jobs affected by this hasn’t been revealed, the studio has said that it is focused on supporting its affected workers.
“Following the end of our external finance partnership on Project Fantasy, IOI has regained full ownership of the project and our IP,” explained the studio in a statement. “We will continue to develop and fund it independently amongst our other projects. 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 proposing 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.”
IO Interactive has further said that this decision was made to ensure its survival as one of the few independent developers and publishers in the world that still put out AAA games. Along with this, the studio also wants to give Project Fantasy “the best possible foundation to succeed”.
“These are hard, but necessary decisions, in order to retain the long-term future of IO Interactive as one of the very few fully independent AAA developers and publishers, as well as to give Project Fantasy the best possible foundation to succeed under our own passion and direction. Project Fantasy is a game, a world, and an IP that we are wholly committed to, and we cannot wait to share the love with you.”
While IO Interactive hasn’t directly named Xbox in its announcement, prior leaked documents from the US Federal Trade Commission’s case against the company have indicated that it had a deal in place with IO Interactive. The company would eventually confirm that it was involved in the funding for Project Fantasy.
The announcement comes just a couple of months after IO Interactive CEO Hakan Abrak had spoken about Project Fantasy. At the time, he said, “It is in a very healthy place; it’s still financed, and it’s amazing.” He went on to say that the team working on it was “very far” along in development.
IO Interactive’s last major release – 007 First Light – has been incredibly successful, becoming one of the best-selling games in the US for all of 2026. The title was released on PC, PS5, and Xbox Series X/S, with a Nintendo Switch 2 port planned for the summer. For more details, check out our review.
