Layoffs Hit 007 First Light Developer as Xbox Withdraws Support for New Fantasy Title

IO Interactive, known for titles like 007 First Light and Hitman 3, surprised the gaming community in 2023 with the announcement of an online fantasy RPG, currently titled Project Fantasy. Unlike their previous projects, IO Interactive planned to collaborate with a third-party for funding and publishing, which turned out to be Xbox. However, Xbox has now decided to withdraw from this partnership.

In a recent update on X, IO Interactive revealed that their “relationship with an external partner on our own IP, Project Fantasy, has come to an end,” without directly naming Microsoft or Xbox. The studio indicated that this development would lead to “staffing decisions,” suggesting that layoffs could be on the horizon. They expressed their commitment to supporting affected employees during this difficult transition.

There had been speculation about Xbox’s involvement with Project Fantasy, and shortly after IO Interactive’s announcement, reports confirmed that Xbox was indeed the external partner. Sources indicated that Xbox was set to fund and publish the game but is now “re-evaluating investment decisions.” An Xbox representative clarified, “We’re not reducing our overall investment in games […] What’s changing is where we’re investing and the kinds of projects we’re backing.”

Despite this setback, IO Interactive plans to continue developing Project Fantasy. They are considering either self-publishing or finding a new partner to help bring the game to market. The studio recently celebrated the success of 007 First Light, which launched in May and garnered positive reviews, selling 3 million copies shortly after release.

The timing of Xbox’s withdrawal raises concerns about potential layoffs within the company, as their fiscal year concludes soon. Speculation suggests that significant layoffs and studio closures could occur in July, putting studios like Compulsion Games and Undead Labs at risk of shutdown and their employees facing job losses.