IO Interactive’s Project Fantasy Faces Layoffs After Xbox Ends Partnership

What We Know

IO Interactive has announced layoffs after Microsoft’s Xbox division pulled its support for the studio’s untitled fantasy online RPG, widely referred to as Project Fantasy. Multiple outlets report that Xbox has ended the publishing/funding relationship for the game; one account summarized the move as Xbox “backing out” of the deal while others report that Xbox withdrew its financial support as part of a broader re-evaluation of investments.

Reporting notes that IO Interactive remains publicly committed to the Project Fantasy universe and to completing the RPG, but that the loss of Xbox’s backing has forced the studio to reduce staff. Coverage ties the change in partner support to broader Xbox business decisions; one outlet framed the publisher’s exit as part of Xbox’s investment re-evaluation and another linked the timing to wider cost-cutting at Xbox. A Bloomberg report cited by other outlets is referenced as confirming Xbox was acting as publisher and pulled funding. Prior coverage identified the project as an online RPG that IO had announced previously.