IO Interactive to Self-Fund the RPG Project Fantasy After Ending Microsoft Partnership
Danish developer IO Interactive has officially parted ways with Microsoft regarding its upcoming online RPG, codenamed Project Fantasy. The studio will now completely self-fund and publish the title moving forward. The transition comes during a turbulent period of industry restructuring, forcing the developer to consolidate its global operations.
Key Takeaways
- IO Interactive has regained 100% ownership of Project Fantasy following the conclusion of its publishing and financial partnership with Microsoft.
- The developer will self-fund the online fantasy RPG alongside its current work on the Hitman franchise and 007 First Light.
- To support this independent strategy, IO Interactive is closing its Istanbul studio and shifting focus away from external mobile projects
What is Project Fantasy and Why Did the Xbox Deal End?
Project Fantasy is an unannounced online fantasy RPG that was originally partnered with Microsoft as a first-party Xbox exclusive. The partnership ended following a massive internal restructuring initiative at Xbox, prompting IO Interactive to reclaim full IP ownership and choose an independent funding model to safeguard the game’s development.
Reports regarding the collaboration first surfaced via Windows Central in April 2021, describing the project as a dragon-themed multiplayer experience. IO Interactive later confirmed the existence of the online fantasy RPG in 2023, noting it was built from the core to expand over many years.
The sudden termination coincides with widespread layoffs across the Xbox ecosystem. Rather than canceling the project or seeking another traditional publisher, the Hitman creator decided to absorb the financial responsibility internally.
Dear gaming community,
— IO Interactive (@IOInteractive) July 7, 2026
Following the end of our external finance partnership on Project Fantasy, IOI has regained full ownership of the project and our IP. We will continue to develop and fund it independently amongst our other projects. With this context, we had to find a new…
Independent Funding Forces Istanbul Studio Closure
Regaining full control over a massive AAA multiplayer intellectual property requires significant financial recalibration. To ensure Project Fantasy has the necessary baseline to succeed, IO Interactive announced major structural cuts across its international offices.
According to an official statement published on the IO Interactive X account, the company is closing its Istanbul studio and laying off the associated staff. The developer framed these layoffs as a painful but vital step to protect its status as a fully independent AAA entity.
The immediate priority for leadership is assisting affected employees in finding new roles within the broader development landscape.
Also, learn more about the evolution of the Hitman Series with our Pixel Sundays!
Core Focus Shifts Away From Mobile Derivatives
The restructuring marks a definitive end to IO Interactive’s ambitions in the mobile gaming market and external publishing ventures. Moving forward, resources will remain locked strictly onto major internal titles.
The studio’s current active pipeline consists of Hitman content, 007 First Light, and Project Fantasy. Management confirmed that the cancellation of external projects and mobile game derivatives will provide the logistical breathing room required to sustain these three high-profile pillars.
Despite the loss of Microsoft’s financial backing, studio leadership remains optimistic about the RPG’s overall quality. Prior to the split, executives described development as being in a highly stable position, indicating that the core gameplay loop and creative vision remain intact.
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