IO Interactive confirms job cut plans as Microsoft pulls funding
Microsoft pulls out of IO Interactive’s Project Fantasy
IO Interactive has confirmed that it needs to go through a “challenging transition” after Xbox pulled its funding for “Project Fantasy”. While IO Interactive remains committed to making this game a reality, it must “adapt to this new reality and its short-term consequences”. These consequences will include “staffing decisions”, which is another way of saying job cuts.
While IO Interactive’s 007 First Light is a successful game, that doesn’t mean that the studio has the money to fund Project Fantasy’s development without Xbox. This news comes amid rumours that Microsoft plans to make sweeping job cuts across Xbox. Several reports have claimed that Xbox could potentially close down several studios.
Dear gaming community,
For a good while, it has been all positive news from IO Interactive. We remain humbled and honored by the response to our latest outing with a young, unproven Bond. A bold new story and a take on one of the most famous characters in entertainment, which…
— IO Interactive (@IOInteractive) June 30, 2026
Xbox Responds
Microsoft has confirmed that it is changing how it invests in projects. Xbox expects to invest the same amount of money into content as it did last year. However, they are changing where this money is being invested, and the kinds of projects that they are backing. Projects with cut funding include IO Interactive’s “Project Fantasy”.
“[Xbox is] taking a fresh look at where we invest so we’re focusing on our highest priorities,”
“We’re not reducing our overall investment in games. We expect to invest about the same in content as we did last year. What’s changing is where we’re investing and the kinds of projects we’re backing.”
According to Bloomberg’s Jason Schreier, Xbox were set to fund and publish IO Interactive’s Project Fantasy. The company has now pulled its funding as part of an internal reshuffle. Rumour has it that Microsoft plans to axe several studios and lay off a large number of employees.
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