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According to Eurogamer, IO Interactive has officially ended its relationship with an external partner regarding Project Fantasy, a large-scale online fantasy RPG currently in development. The studio confirmed that this change in partnership will lead to short-term consequences involving "staffing decisions," a term widely interpreted by industry analysts as impending layoffs for the project's team.
Microsoft shifts investment priorities
Bloomberg reports that the external partner involved in the deal was Microsoft's Xbox division. In response to the news, an Xbox spokesperson clarified that the company is not reducing its total spending on games but is instead reevaluating where those funds are allocated. The spokesperson noted that the company is focusing on "highest priorities" and specific types of projects moving forward.
The shift comes during a period of significant reorganization at Microsoft under new leadership. Asha Sharma, who recently took over from Phil Spencer and Sarah Bond, is reportedly initiating a "reset" intended to streamline the company's portfolio. This restructuring may involve:
Impact on IO Interactive's pipeline
Project Fantasy has been in development since approximately 2021 and was formally announced in 2023. It reportedly boasted the second-largest development team at IO Interactive, trailing only the studio's recent hit, 007 First Light. While the loss of Microsoft funding is a significant blow, the studio remains committed to the project. Véronique Lallier, chief development officer at IOI, previously highlighted that the company was eager to leverage its technology for this new IP.
The news is particularly notable given the recent commercial success of 007 First Light, which sold nearly 3 million copies in its debut week. While the studio faces a difficult transition period due to the funding withdrawal, they will now need to secure a new path forward for Project Fantasy independently or through a different publishing arrangement.