With the current state of the gaming industry, one could hope for some good news, and if it were a month ago, we would be talking about new releases breaking records, like the new 007 game from IO Interactive. But with the current state of everything IO Interactive was affected by, it unfortunately lost funding for its in-development game, Project Fantasy. We later found out that XBOX was backing them, but due to XBOX’s new reorganization, they have now stopped funding them. And now, in semi-good news, IO Interactive has regained full ownership of Project Fantasy and will continue to support its development. Still, it now faces layoffs, as alluded to and now confirmed.
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…
— IO Interactive (@IOInteractive) July 7, 2026
So now that the groundwork has been laid down, what exactly is going on with IO Interactive? On June 30th, IO posted a tweet on X stating that they had officially lost funding for their current project, Project Fantasy, but they initially didn’t identify their backer. Bloomberg later reported that it was XBOX, a claim that was later confirmed. They stated that even with the loss of the backer. They were still 100% committed to the project, and the company would restructure to address the new outcome, which many believed would mean layoffs. And now, on July 7th, IO Interactive put out a tweet stating that they have officially gained complete ownership of Project Fantasy, which is a really good thing, as partnership breakups are messy, especially in the gaming industry.
“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.”
But now comes the bad part: the project’s burden has shifted entirely to them, and they must make financial decisions to stay on course. ” 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.” And, as they remain 100% committed to Project Fantasy, they must make the hard decision to close Studio Istanbul and let people go to remain a fully independent AAA studio and continue with the project.
“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.”
Overall, the situation sucks and mirrors the current state of gaming. It’s great that they have gained complete ownership of the IP and will continue to pursue it with their deep passion for the project, but a whole studio and an undisclosed number of layoffs were the price they had to pay. IO Interactive isn’t completely to blame, as the current state of everything is so volatile that many didn’t see the initial drop of their backer coming. All in all, it’s great that IO will continue to pursue Project Fantasy despite everything, and I wish them luck with the project and hope the devs’ work sees the light of day.
“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.”