IO Interactive announces layoffs following unexpected fantasy game setback
IO Interactive has confirmed layoffs after losing an external publishing partner for its long-in-development fantasy RPG, although the studio insists the project will continue.
IO Interactive has announced a round of layoffs after an unexpected setback involving its original fantasy role-playing game, while stressing that development on the new intellectual property will continue.
The Danish studio, best known for the Hitman franchise and recently released James Bond adventure 007 First Light, confirmed the news in a statement shared with fans.
The developer wrote: "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."
The studio then revealed that "a relationship with an external partner on our own IP, Project Fantasy, has come to an end."
IO Interactive said: "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."
The developer did not disclose how many employees have been affected or identify the publishing partner involved. However, reports have linked the decision to Microsoft's Xbox division.
Documents that emerged during the FTC's legal battle over Microsoft's acquisition of Activision Blizzard in 2023 indicated that IO Interactive's fantasy project, then referred to internally as Project Dragon, was planned as an Xbox Game Studios-published title for Xbox and PC.
Despite the publishing setback, IO Interactive insisted the game itself remains in active development.
It said: "Project Fantasy is a game, a world, and an IP that we absolutely love and remain 100 per cent committed to, now and in the future. This wonderful universe will see the light of day."
The announcement comes shortly after the successful launch of 007 First Light, which has been warmly received by critics and players. IO Interactive specifically highlighted the positive response to its original take on a younger James Bond as evidence that the studio remains creatively ambitious despite the latest challenges.
The layoffs also arrive during a period of wider uncertainty across Microsoft's gaming business. Xbox is reportedly preparing a major restructuring that could include further studio closures, project cancellations and job cuts, with labour unions representing Xbox employees seeking additional protections for workers.
Although IO Interactive faces a difficult period following the loss of its publishing partner, the developer has made clear it has no intention of abandoning Project Fantasy, which remains one of the studio's biggest long-term projects alongside the Hitman series and its James Bond franchise.
