IO Interactive Closes Istanbul Studio, Cuts Jobs After Xbox Drops Project Fantasy Funding

IO Interactive, the studio behind the Hitman series and 007: First Light, is closing its Istanbul office and laying off staff. The developer says the cuts follow Microsoft's decision to stop funding Project Fantasy, IO's upcoming RPG.

Xbox Pulls Back Funding

IO Interactive said Xbox had dropped out of funding Project Fantasy, and that as a result the studio has regained full ownership of the project and its related intellectual property. IO said it will now fund the RPG's development independently. That shift meant pulling back in other areas, including work on external projects and potential mobile game derivatives. "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," the studio said, describing the layoffs and the Istanbul closure as "hard, but necessary decisions."

Istanbul Office Shuts Down

The studio confirmed it is closing its Istanbul office and beginning a process to part ways with staff there, colleagues it said "have been a meaningful part of what makes IOI what it is." IO framed the restructuring as a way to concentrate resources on its main internally developed titles rather than external efforts, and noted that its standing as a fully independent AAA developer and publisher is a rarity in the modern industry. IO first signaled in June that layoffs were likely after Xbox pulled out of Project Fantasy; this statement marked the first confirmation of the specifics, including the Istanbul closure.

What Comes Next

IO said the cuts give Project Fantasy "the best possible foundation to succeed under our own passion and direction." No sequel to 007: First Light has been announced despite the game's critical and commercial success, and whether IO pursues one remains unclear. Microsoft has said it stopped funding Project Fantasy as part of a renewed focus on the games and franchises it expects to be most profitable, adding that it is not reducing its overall investment in games but changing where that money goes. Xbox also backed out of funding the next game from Naughty Dog veteran Bruce Straley. With Xbox's funding gone, IO Interactive is now shouldering Project Fantasy's development on its own — a shift the studio says required closing its Istanbul office and cutting staff to sustain its long-term future.