IO Interactive has announced layoffs and the closure of its Istanbul studio as part of a broader restructuring following the loss of external funding for its upcoming online fantasy RPG, Project Fantasy. Despite the difficult decision, the independent developer confirmed that the game remains in active development under its full ownership.
The studio shared the update in a statement on X, explaining that the changes are intended to strengthen its long-term future while allowing Project Fantasy to move forward independently.
IO Interactive restructures after Xbox funding ends
In its statement, IO Interactive said it needed to “find a new balance for the long-term future of the studio” by focusing on its core internal projects.
As a result, the company confirmed the closure of its Istanbul office and the start of a layoff process affecting part of its workforce. The studio also emphasized that its immediate priority is supporting affected employees and helping them find new opportunities.
IO Interactive added:
“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.”
Although Bloomberg previously reported that Xbox had withdrawn financial support for Project Fantasy, IO Interactive confirmed it has regained complete ownership of the original IP.
The studio reaffirmed its commitment to the project, stating:
“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.”
Alongside Project Fantasy, IO Interactive continues development on 007 First Light while supporting the long-running Hitman franchise.
The restructuring comes amid wider changes across Microsoft’s gaming business, which has seen thousands of layoffs and multiple studio reorganizations in recent weeks. Even so, IO Interactive’s decision to self-fund Project Fantasy signals the company’s confidence in its future as an independent AAA game developer and publisher.
