Microsoft has confirmed a strategic pivot in its gaming investments, stating it is focusing on "highest priorities" and is not reducing its overall spending on games. This adjustment in strategy has led to the cancellation of Xbox's funding for IO Interactive's upcoming fantasy title, known by the working title Project Fantasy.
A spokesperson for Microsoft told Bloomberg that the company is "taking a fresh look at where we invest so we're focusing on our highest priorities." Despite the shift in focus and the cessation of funding for Project Fantasy, Microsoft asserts that its total investment in games this year is expected to remain consistent with the previous year.
"What's changing is where we're investing and the kinds of projects we're backing," the spokesperson added. IO Interactive has indicated that Project Fantasy will still be developed, though the specifics of how the studio will proceed without Microsoft's backing are yet to be clarified. The studio is also undergoing layoffs, though the number of affected employees has not been disclosed.
This move comes as part of a broader business "reset" within Xbox under CEO Asha Sharma. Reports suggest this reorganization may also involve significant layoffs, studio closures or divestitures, and further game cancellations. These broader changes are reportedly slated to commence around July 6.