IO Interactive, fresh off the success of "007 First Light," has announced a significant setback with its long-in-development online fantasy RPG, codenamed Project Fantasy. The studio revealed that an external partner has ended its funding relationship for the project, a development that is expected to lead to layoffs.
"A relationship with an external partner on our own IP, Project Fantasy, has come to an end," IO Interactive stated on X. "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." The studio emphasized its commitment to supporting affected employees during this transition.
While IO Interactive did not name the partner, speculation points to Microsoft, given reports of impending layoffs and potential studio closures within its Xbox division. This situation echoes past incidents where Microsoft reportedly ended funding for projects at other studios, such as Romero Games and Avalanche Studios, following major restructuring. John Romero, co-founder of Romero Games, expressed empathy, stating, "As a company, we've been there, and it's extremely difficult."
Previous reports from 2021 indicated that IO Interactive was collaborating with Microsoft on a fantasy game codenamed Project Dragon. It remains unclear if Project Fantasy is a successor or evolution of that project, though IO Interactive CEO Hakan Abrak had previously teased a "third universe" that was distinct and a "love child" of veteran staff.
Despite the loss of funding, IO Interactive has reaffirmed its dedication to Project Fantasy. "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 stated. "This wonderful universe will see the light of day." However, given the current volatility in the video game industry, the timeline for the project's eventual release is now uncertain.