After a fantastic launch for 007 First Light and an exciting few months for Bond fans, IO Interactive is now facing a major setback. The end of a partnership on another of its games has led to layoffs and, as research by ExpectingMrBond.com shows, the closure of one of its studios.
At the centre of the situation is Project Fantasy, a new online fantasy RPG based on an original IP created and owned by IO Interactive.
The project appears to date back to at least 2021, when the first reports emerged about an IO Interactive fantasy RPG codenamed Project Dragon. In February 2023, IO Interactive officially announced Project Fantasy, describing it as a new online fantasy RPG and an entirely original IP.
Now, several years into the project’s development, IO Interactive has announced that its relationship with an external partner on Project Fantasy has come to an end. The studio did not identify the company involved.
There was, however, already strong evidence pointing to Xbox. Internal Microsoft documents that became public in 2023 as part of the US Federal Trade Commission’s legal proceedings over Microsoft’s acquisition of Activision Blizzard listed Project Dragon as an IO Interactive title connected to Xbox Publishing.
Following IO Interactive’s statement last week, an Xbox spokesperson confirmed to Bloomberg that Xbox was the external partner that had ended its involvement with Project Fantasy.
The end of the partnership has had immediate consequences. IO Interactive said it now had to adapt to this “new reality” and its “short-term consequences, including staffing decisions” — decisions that have resulted in layoffs.
IO Interactive closes its Istanbul studio
The consequences extend beyond individual layoffs. Research by ExpectingMrBond.com shows that IO Interactive has closed its Istanbul studio, with current and former employees confirming the closure in public posts on LinkedIn.
The layoffs have also affected employees from other IO Interactive studios and a range of disciplines, including long-serving employees and people who previously worked directly on 007 First Light.
IO Interactive has not disclosed the financial terms of its former agreement with Xbox or the scale and nature of the support it has lost. The success of 007 First Light therefore does not tell us how easily the consequences of losing a major partner on another long-term production could be absorbed.
The developments at the two companies therefore appear closely connected. Xbox has said that it is not reducing its overall investment in games, but changing where it invests and the kinds of projects it backs. Its exit from Project Fantasy appears to be part of that wider shift in priorities. With the closure of IOI Istanbul and layoffs affecting employees across different parts of the company, the restructuring at Xbox has now led to a restructuring at IO Interactive.
What comes next for 007 First Light and Project Fantasy?
With 007 First Light now released, IO Interactive’s future production structure is likely to look very different from the one that existed during the full development of the Bond game. Project Fantasy is the studio’s next major game in production and will likely require the largest share of its development resources, while smaller teams may continue to support 007 First Light and Hitman after launch.
For now, there is no indication that the restructuring will affect future support for 007 First Light or Hitman.
The bigger uncertainty surrounds Project Fantasy. Despite losing Xbox as a partner, IO Interactive insists that it remains fully committed to the game.
“Project Fantasy is a game, a world, and an IP that we absolutely love and remain 100% committed to, now and in the future,” the studio said. “This wonderful universe will see the light of day.”
How that future will be financed and developed remains unclear. IO Interactive has not said whether it is seeking a new external partner, intends to carry a larger share of the development costs itself, or has secured another form of support.
The full scope of the layoffs also remains unknown. IO Interactive has not disclosed how many employees are affected or which teams they belonged to at the time of the cuts.
Finally, we want to send our heartfelt support to everyone affected by the layoffs. As fans, we know how much talent, passion and hard work goes into creating the games and experiences that mean so much to us. We are deeply grateful for everything they have contributed and wish them all the very best for whatever comes next.
Source:
Bloomberg.com – Xbox Pulls Out of “Project Fantasy” Video Game from IO Interactive
