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IO Interactive Has Taken Back Project Fantasy, And Now Has To Lay Off Staff To Survive

July 8, 2026 by Ryan Parreno

The sad ironic state of the industry, illustrated.

IO Interactive has made some huge announcements about Project Fantasy and the studio itself.

While IO has yet to reveal the game completely, they have heavily suggested its fantasy theme. The rumor going around is that this will be a huge online fantasy RPG, and that the title is being bankrolled by Xbox.

Shortly after Asha Sharma’s Resetting Xbox newsletter, IO Interactive made this announcement:

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.

…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.

Neither IO or Xbox confirmed that Xbox was funding Project Fantasy, possibly part of the deal that allowed them to take the IP back.

Regardless if IO is collateral damage to Xbox’s reset or not, this shows how paradoxical the industry is sometimes, that sometimes layoffs are necessary to survive and continue making games.

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Category: UpdatesTag: I/O Interactive, io interactive, PC, Project Fantasy, PS5, Switch 2, Xbox Series X/S

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