IO Interactive Loses Xbox Funding for Project Fantasy, Closes Istanbul Studio

IO Interactive, the developer behind the Hitman trilogy and the upcoming 007: First Light, has confirmed it is closing its Istanbul studio and laying off an undisclosed number of developers following Xbox's decision to pull its publishing and funding deal for Project Fantasy. The studio announced it has regained full ownership of the project and intends to continue development independently, but acknowledged the painful restructuring required to do so — describing the layoffs as necessary steps "to find a new balance" as it charts a new course without Microsoft's backing.

Project Fantasy, IO Interactive's ambitious fantasy-themed title that had been in development under an Xbox publishing arrangement, will press on despite the setback. The Copenhagen-based studio has not revealed a new publishing partner at this time, leaving the project's financial future an open question. The closure of the Istanbul office marks a significant blow to the team members who worked there, and comes as part of a broader wave of industry turbulence that has seen major publishers and platform holders scale back investments across the board. IO Interactive now faces the challenge of sustaining a large-scale project independently while absorbing the human cost of losing an entire studio location.