IO Interactive has announced layoffs after its relationship with an external publishing partner on Project Fantasy came to an end. The studio shared the news in a statement on social media, confirming that the staffing reductions are tied to the loss of that partnership while stressing that development on the project will continue.
The developer said it has experienced a string of positive milestones in recent months following the reception to 007 First Light, its upcoming James Bond game starring a younger version of the iconic spy. That momentum was interrupted by the end of its partnership on Project Fantasy, leading to what the studio described as difficult staffing decisions. IO Interactive also said it is committed to supporting employees affected by the layoffs.
Dear gaming community,
For a good while, it has been all positive news from IO Interactive. We remain humbled and honored by the response to our latest outing with a young, unproven Bond. A bold new story and a take on one of the most famous characters in entertainment, which…
— IO Interactive (@IOInteractive) June 30, 2026
While the studio did not identify the external partner, reports have indicated that Microsoft had been attached to Project Fantasy as its publishing partner. The collaboration first came to light through documents released during Microsoft’s FTC trial over its Activision Blizzard acquisition, though neither company had officially confirmed the arrangement.
Project Fantasy was first announced in 2023 as IO Interactive’s first original IP since the modern Hitman trilogy. The fantasy RPG marks a significant shift for the studio after years of focusing on stealth-action games. Although little has been shown publicly, CEO Hakan Abrak previously described the project as being in a healthy state of development.
Despite the publishing setback, IO Interactive made it clear that the game’s future is not in doubt.
“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.”
The announcement follows a broader period of restructuring across Microsoft’s gaming business, with several studios and projects affected by changes to the company’s publishing strategy. It remains unclear if IO Interactive will self-publish Project Fantasy or secure a new publishing partner. If you missed it, check out our review of 007: First Light.
What do you think about IO Interactive’s commitment to Project Fantasy despite today’s layoffs? Let us know in the comments, and stay tuned to Noisy Pixel for more gaming news and updates.
