007 First Light studio IO Interactive hit by layoffs after Xbox pulls funding for Project Fantasy

IO Interactive, the Copenhagen studio behind the Hitman World of Assassination trilogy and the recently released 007 First Light, has confirmed layoffs following the collapse of its publishing partnership for Project Fantasy, its unannounced fantasy RPG. Xbox has been confirmed as the partner that withdrew funding, marking yet another sign of Microsoft tightening its investment across the games industry.

The details:

• IO Interactive confirmed the layoffs on June 30, stating that an "external partner" had ended its relationship with Project Fantasy, and that the studio would need to make "staffing decisions" as a result; the number of affected staff has not been disclosed
• Xbox confirmed its involvement in a statement, saying the company is "taking a fresh look at where we invest" and focusing on "highest priorities," while insisting "we're not reducing our overall investment in games"
• Despite losing the publishing deal, IO Interactive says it remains "100% committed" to Project Fantasy and will look to either find alternative funding or self-publish the project
• Project Fantasy has been described as an online fantasy RPG built as a new IP "to entertain players and expand for many years to come"
• The news comes despite a strong commercial start for 007 First Light, which IO Interactive celebrated reaching 3 million copies sold within two weeks of launch
• The Xbox funding withdrawal adds to a growing picture of Microsoft pulling back from third-party publishing commitments as part of its ongoing games division restructuring