Hitman studio announces layoffs after Xbox reportedly cancels Project Fantasy despite 007: First Light's success

IO Interactive, the studio behind the critically acclaimed Hitman series, recently found success with its newest blockbuster, 007: First Light, which sold 1.5 million units in one day and 3 million in two weeks. The game has also earned a Metascore of 84/100 and 90% positive reviews on Steam. However, despite IO Interactive’s recent success, the studio is facing challenges following a recent fallout with Xbox.

A funding issue linked to Xbox

IO Interactive is reportedly facing job cuts after Microsoft’s Xbox division ended its partnership with the Danish developer on June 30 for a new IP called Project Fantasy, which was intended to be an online RPG. As a result, IO Interactive has had to make the difficult decision to cut employees from its studio.

In an official statement on X, IO Interactive said:

“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 the world has embraced with love.

However, today we have to share some more downbeat news. A relationship with an external partner on our own IP, Project Fantasy, has come to an end. This means we have to adapt to this new reality and its short-term consequences, including staffing decisions, which is what is happening as we write this update, and we are fully committed to supporting those affected through this challenging transition.

Project Fantasy is a game, a world, and an IP that we absolutely love and remain 100% committed to, now and in the future. This wonderful universe will see the light of day.”

More "changes" to come from Xbox

Bloomberg reporter Jason Schreier later confirmed that the partner was Xbox, which had agreed to fund and publish Project Fantasy. A spokesperson for Xbox told Bloomberg that the gaming division is “taking a fresh look at where we invest, so we’re focusing on our highest priorities.”

This development may be minor compared with what is rumored to be coming in the following months, as Microsoft is reportedly preparing Xbox for major internal structural changes, with widespread layoffs expected to begin in July.