IO Interactive Announces Istanbul Studio Closure, Layoffs After Xbox Ends Project Fantasy Funding

Days after Xbox announced plans to lay off thousands of employees and spin off multiple studios, one of its publishing partners has now confirmed job cuts of its own. IO Interactive, the studio behind the acclaimed Hitman franchise and the new James Bond-starring 007: First Light, declared that it will close its Istanbul studio, while also laying off an unspecified number of employees. As per the video game publisher, the move follows the ending of an external funding partnership for its long-in-development fantasy RPG, Project Fantasy.

IO Interactive Confirms Financing for Project Fantasy Has Ended

In a statement posted on X, IO Interactive confirmed that its external financing partnership for Project Fantasy had ended, which means it has now regained full ownership of both the project and its intellectual property. While the studio did not explicitly name the partner, previous reports have suggested that the online fantasy RPG was being funded by Xbox.

Microsoft's gaming division appears to have withdrawn support for Project Fantasy, although neither Microsoft nor IO Interactive has confirmed whether the decision was directly related to Xbox's broader restructuring efforts.

You can read the full statement below:

Dear gaming community,
 
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 balance for the long-term future of the studio, focused on the success of our main internal core titles instead of external projects and potential mobile game derivatives. This has meant making changes as well as proposed changes across our studios: the closure of our Istanbul studio and starting a process to part ways with colleagues who have been a meaningful part of what makes IOI what it is.
 
Our immediate focus is on supporting those affected as best we can through this period. If you are aware of any opportunities within your network, we would be genuinely grateful for any support you can offer to any of the talented people across IOI who might be looking for new opportunities.
 
These are hard, but necessary decisions, in order to retain the long-term future of IO Interactive as one of the very few fully independent AAA developer and publisher, as well as to give Project Fantasy the best possible foundation to succeed under our own passion and direction. Project Fantasy is a game, a world, and an IP that we are wholly committed to, and we cannot wait to share the love with you.

What's Next

Despite this, the development of the game is expected to continue. IO Interactive emphasised that it will continue developing Project Fantasy independently while funding it alongside its existing portfolio of games. The studio, however, acknowledged that the loss of external funding required it to rebalance its long-term business strategy.

As part of the restructuring, IO Interactive will close its Istanbul studio and begin a process to part ways with employees across the company. The developer did not disclose how many jobs would be affected. Following the closure, it will continue operating from its headquarters in Copenhagen, alongside studios in Barcelona in Spain, Brighton in the UK, and Malmö in Sweden.

The Hitman developer described the decisions as "hard, but necessary", saying they were required to "retain the long-term future of IO Interactive as one of the very few fully independent AAA developer and publisher."

The announcement comes shortly after Xbox revealed what it called the largest restructuring in the brand's history. Microsoft plans to eliminate around 3,200 roles across Xbox through fiscal year 2027. Xbox CEO Asha Sharma cited an unhealthy gaming business, slower-than-expected growth of Game Pass, rising operating costs, and a challenging hardware market as the reasons behind the planned layoffs.