IO Interactive Reclaims Project Fantasy, Cuts Istanbul Studio and Jobs
IO Interactive is closing its Istanbul studio and cutting roughly 40 jobs after Xbox withdrew funding for Project Fantasy, the Hitman studio’s long-in-development online fantasy RPG. The Danish developer confirmed the closure in a statement posted to X on July 7, saying it has regained full ownership of the project and will now self-fund it going forward.
Istanbul Office Closes After Barely Three Years
IOI Istanbul opened in 2023 in the city’s Sarıyer district as a foothold for AAA development in Turkey, according to the studio, and it contributed to 007 First Light, upcoming Hitman titles and Project Fantasy. Its shutdown means IO Interactive now runs studios out of Copenhagen, Brighton, Barcelona and Malmö, with the closure reducing the number of studios contributing to Project Fantasy from five to four, according to IOI’s original production breakdown.
IO Interactive has not detailed severance terms or whether any Istanbul-based roles will be preserved remotely. In its statement, the studio wrote: “This has meant making changes as well as proposed 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.”
Xbox Confirmed as the Departed Funding Partner
IO Interactive’s public statements never name Xbox directly, but IOI did not name Xbox directly, but Bloomberg reported in late June that Xbox was the partner in question. According to Game Informer, Xbox told Bloomberg it ceased supporting Project Fantasy after reevaluating the types of projects it wanted to invest in, a portfolio call that arrived just as Microsoft’s own gaming division absorbed sweeping cuts.
The timing lines up almost exactly with Xbox’s broader restructuring. This announcement comes as part of a broader Xbox restructuring that includes 1,600 layoffs immediately and up to 3,200 total cuts through fiscal year 2027. As part of that shake-up, Xbox is also spinning off four of its studios: Compulsion Games, Double Fine Productions, Ninja Theory, and Undead Labs, while Game Informer additionally lists Arkane Studios among those affected by the wider reorganisation.
IOI Regains Project Fantasy’s IP, Pledges to Self-Fund
The upside for IO Interactive is full creative and commercial control of an IP it has nurtured for years. Project Fantasy’s roots go back further than its 2023 announcement — industry reports first referenced the game in 2021 under the codename Project Dragon before IOI officially unveiled it as Project Fantasy in February 2023. The studio framed the split as painful but necessary for its long-term independence, stating: “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 developer and publisher, 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.”
That independence itself has history: IOI, the maker of the Hitman games, regained its independence from Square Enix in 2017. No release window, platform list or gameplay details have been confirmed for Project Fantasy, and with Microsoft’s backing gone, the studio will also need to replace any cloud or technical infrastructure it previously drew on through the partnership.
A Rough Follow-Up to 007 First Light’s Launch
The cuts land awkwardly close to one of IO Interactive’s biggest commercial wins in years. The Danish developer, best known for the Hitman franchise and last year’s 007 First Light, announced the closure Monday in a statement posted to X, only weeks after the James Bond game’s launch drew strong sales and reviews. IOI still doesn’t control the 007 license outright — Amazon/MGM owns the franchise rights that were licensed for First Light, and Amazon has yet to confirm the studio will return for a sequel.
For a studio that has spent almost a decade building itself back up as one of the industry’s few fully independent AAA developers, the Istanbul closure is a reminder of how quickly a single publisher’s strategy shift can ripple down to a partner studio’s payroll — even one riding high off a hit release.
Read also: Id Software Says Xbox Layoffs Shrank Studio to DOOM 2016-Era Size
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