Ethan Crossfield 
If you were keeping an eye on IO Interactive’s online RPG Project Fantasy, this is the update that changes the timeline: the studio says layoffs are underway after its external partner relationship for the project ended. Here’s what happened, who’s impacted, and what IO says it will do next.
What changed for Project Fantasy—and why layoffs are happening
IO Interactive, the studio behind the Hitman series and 007 First Light, announced Project Fantasy as a new online RPG in February 2023. While the game is still in development, IO now says the project has hit a major business snag that will lead to staffing changes.
In a studio update, IO explained that a relationship with an external partner on its own IP—Project Fantasy—has come to an end. The immediate consequence, according to the message, is that the team must adapt to this new reality, including making short-term staffing decisions. IO also stated it is committed to supporting affected employees through the transition.
Who the external partner is reportedly—and what Xbox claims instead
Bloomberg reported that Xbox confirmed it was the external partner funding Project Fantasy and that it has pulled out after re-evaluating its investments. In response to Bloomberg, an Xbox spokesperson said the company is not planning to invest less in video games overall. Instead, the spokesperson indicated that the change is about where Xbox is investing and what kinds of projects it is backing.
So while Project Fantasy loses its external funding relationship, the broader message from Xbox is that its overall video game investment level remains aligned with last year—just redirected toward different priorities.
What IO says is next for the game you’re waiting on
Despite the funding relationship ending, IO says it remains fully committed to Project Fantasy. The studio describes the project as an IP and a world it loves, adding that it will see the light of day.
For readers tracking the studio’s momentum, this matters because IO’s last release in the Bond universe—007 First Light—arrived earlier this year with positive reviews and strong sales. That success doesn’t appear to have insulated Project Fantasy from external funding shifts, but IO’s statement makes clear it intends to keep working on the RPG.
What players should know
- Project Fantasy is still in development, but IO says layoffs are occurring due to a lost external partner relationship tied to the project.
- IO frames the change as a short-term staffing adaptation, while also promising support for affected employees.
- Bloomberg reports Xbox was the external partner funding the RPG, though Xbox says its overall video game investment level won’t drop—only its focus will change.
| Item | What the source says |
|---|---|
| Project | IO’s online RPG IP codenamed Project Fantasy |
| Trigger for layoffs | End of an external partner relationship for Project Fantasy |
| Who reportedly was the partner | Xbox, according to Bloomberg |
| Xbox’s response | Says it won’t invest less overall; changes where it invests and which projects it backs |
| IO’s commitment | Says it remains fully committed to Project Fantasy and expects it to launch in the future |
Expert View
This is a classic “funding reality” moment rather than a creative reversal: IO isn’t walking away from Project Fantasy, but the studio is acknowledging that external support ended and that staffing must adjust immediately. For players, the clearest takeaway is to treat Project Fantasy as still alive—yet potentially affected in scope and pacing—because business priorities shifted at the partner level even if overall platform spending remains steady.
