IO Interactive’s Project Fantasy Suffers Setback As Developer Cuts Ties With External Partner Xbox

IO Interactive has announced it has ended its relationship with an external partner for Project Fantasy — confirmed to be Xbox via Bloomberg — but has assured fans that the game is still very much alive.

Speaking in a statement issued this week, the 007 First Light creator revealed that it remains “100% committed” to Project Fantasy, although conceded that it may be facing layoffs in wake of Xbox’s exit.

However, today we have to share some more downbeat news. A relationship with an external partner on our own IP, Project Fantasy, has come to an end. 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. Project Fantasy is a game, a world, and an IP that we absolutely love and remain 100% committed to, now and in the future. This wonderful universe will see the light of day.

Speaking with Bloomberg, a spokesperson for Microsoft said that the console maker is “taking a fresh look at where we invest so we’re focusing on our highest priorities.”

Speaking back in May 2026 with The Game Business, IO Interactive CEO Hakan Abrak stated that Project Fantasy was “in a very healthy place,” although stopped short of confirming at the time who the studio had teamed up with for the game. For those unaware, Project Fantasy was initially announced in February 2023 and is an online fantasy-based RPG that is designed to keep players invested for many years.

[Source – Bloomberg via VGC]