Danish developer IO Interactive has announced layoffs due to an unforeseen setback involving its upcoming fantasy game, which was reportedly in partnership with Xbox for publishing. The studio confirmed that a relationship with an "external partner" on their original IP, codenamed Project Fantasy, has concluded.
As a consequence of this terminated partnership, IO Interactive is implementing staffing adjustments. The company stated its full commitment to supporting those employees impacted by this challenging transition. Despite this setback, IO Interactive remains dedicated to the development of Project Fantasy, vowing that the game and its universe will eventually be released. The success of the recently released 007 First Light is believed to be unaffected by these developments.
While IO Interactive did not officially name the external partner, previous reports from a 2023 FTC vs. Microsoft trial leak indicated that Microsoft, and specifically Xbox Game Studios, was slated to publish Project Fantasy, then known as Project Dragon, as an exclusive title for Xbox and PC.
This news emerges as Microsoft reportedly prepares for significant restructuring within its Xbox division, which may include studio closures and further game cancellations. Unionized Xbox employees are reportedly seeking to establish protections against potential staff reductions.