IO Interactive keeps Project Fantasy alive after Xbox funding exit, but closes Istanbul studio

IO Interactive is moving forward with Project Fantasy on its own after Xbox ended its external funding partnership for the game. The studio has regained full ownership of the project and its intellectual property, but the decision comes with a major cost: IOI is closing its Istanbul office and cutting staff as it reshapes the business around self funding.

Project Fantasy was first revealed more than three years ago as a new direction for the Hitman studio. Instead of stealth sandboxes or licensed action games, IOI is building an online fantasy action RPG designed as a long term world. Early descriptions point to a classic fantasy setting with party based adventuring, different races, weapons, armor, and a brighter sense of exploration rather than a grim tone.

The problem is financial. With Xbox no longer backing the project, IO Interactive now has to balance ambition with survival. The company says it remains committed to Project Fantasy, but it also needs to focus on its main internal titles and avoid stretching resources across outside projects or possible mobile spin offs.

Project Fantasy remains in development, but IOI is narrowing its focus to protect the studio

IOI said it will continue developing and funding Project Fantasy independently, alongside its other major projects. The studio described the cuts as difficult but necessary to preserve its long term future as one of the few fully independent AAA developers and publishers.

The closure of IOI Istanbul is the clearest sign of how serious the shift is. The Istanbul studio opened in March 2023, but it will now be shuttered as part of the restructuring. IOI also said it has started a process to part ways with some colleagues across its studios, while asking the wider industry to support affected workers where possible.

The timing is notable because IO Interactive recently scored a major success with 007 First Light. That game received strong reviews and reportedly sold well, giving the studio momentum. Even so, Project Fantasy is a very different kind of risk. A long term online RPG is expensive to build, difficult to support, and much more demanding than a traditional single player release.

IOI’s commitment suggests the studio sees Project Fantasy as more than a side project. The company described it as a game, world, and IP it is fully committed to. That language matters because it shows IOI wants to own a major original franchise rather than rely only on Hitman or licensed games like James Bond.

The concept also gives IOI room to expand beyond its usual identity. Project Fantasy has been described as familiar, but unlike anything the studio has made before. Inspirations include Fighting Fantasy books and the idea of a diverse group of characters working together. That points to a more cooperative and adventure driven experience, possibly with long term online systems designed to keep players returning.

Still, the road ahead is harder now. Losing Xbox funding means IOI must carry more risk itself. Closing a studio and reducing staff can help control costs, but it can also slow development or limit scope. The challenge will be keeping the project ambitious enough to stand out while making sure the company does not overextend itself.

For now, Project Fantasy is not canceled. In fact, IO Interactive seems determined to keep it alive under its own direction. But the studio is paying a clear price for that independence. The closure of IOI Istanbul shows that the project’s future now depends on a tighter, more focused version of the company, one that is betting on its ability to fund and deliver a major new fantasy world without Xbox behind it.