IO Interactive, the Copenhagen-based studio behind the critically acclaimed 007 First Light and the Hitman series, has announced that an external partner has unexpectedly withdrawn funding for its next project, codenamed Project Fantasy. This development has thrown the game into uncertainty and led to staffing reductions at the studio.
Project Fantasy Loses Funding
Project Fantasy, described as an RPG shooter—a genre new to IO Interactive—was being developed in partnership with an unnamed external partner that was partially funding the project. According to a statement from the studio, the relationship has come to an end, forcing IO Interactive to adapt quickly. The statement reads: “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.”
Layoffs at IO Interactive
As a result of the funding withdrawal, several developers at IO Interactive are facing job losses. The studio did not specify the number of employees affected but confirmed that staffing decisions are being made. This news comes just over a month after the successful launch of 007 First Light in May 2026, which received widespread critical acclaim.
Xbox Speculated as the Partner
While IO Interactive did not name the partner, industry speculation points to Xbox. A leaked document from Xbox’s 2023 acquisition of Activision Blizzard revealed that Xbox was collaborating with IO Interactive on a project then called ‘Project Dragon,’ which is believed to be the same as Project Fantasy. The timing coincides with a major restructuring at Xbox, where CEO Asha Sharma has reportedly prepared staff for a ‘reset’ over the coming months, with potential layoffs and shutdowns at first-party studios such as Ninja Theory, Double Fine, and Compulsion Games.
Future of Project Fantasy
Despite the setback, IO Interactive remains committed to Project Fantasy. In its statement, the studio vowed: “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.” It is unclear whether IOI will seek another external partner or self-publish the project, as it has done with previous titles.
The news has been met with disappointment from the gaming community, especially given the success of 007 First Light. IO Interactive expressed gratitude for the support, stating in a social media post: “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.”
