IO Interactive says Project Fantasy remains in development after the end of its Xbox-linked funding deal, but the studio is closing IOI Istanbul as it shifts the RPG under independent control.
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Project Fantasy is still alive, but its support structure has changed
IO Interactive has confirmed that Project Fantasy remains in development after the end of its external finance partnership, even as the Hitman and 007 First Light studio closes its Istanbul branch and begins parting ways with staff. In a statement posted to X and reported by Push Square, VGC, Polygon, Game Developer, and GamesIndustry.biz, IOI said it has regained “full ownership of the project and our IP” and will “continue to develop and fund it independently amongst our other projects.”
That is the clearest concrete update RPG fans have had on IO Interactive Project Fantasy since the funding split became public. The tension is immediate: the game has survived the collapse of its publishing and financing arrangement, but the studio is shrinking around it. GamesIndustry.biz reported that Xbox withdrew from its agreement to fund and publish the online fantasy RPG, while Kotaku said Microsoft confirmed its involvement to Bloomberg after IOI initially referred only to an “external partner.”
IOI’s own wording keeps the focus on control rather than cancellation. The studio said Project Fantasy is “a game, a world, and an IP” it remains wholly committed to. That matters for how to read the news. This is not an announcement of a release window, platform plan, gameplay reveal, or new publishing deal. It is a survival statement paired with restructuring news, and those two parts should be held together.
The Xbox deal ending leaves IOI with ownership and the bill
The most important business change is ownership. According to IOI’s statement, the end of the external finance partnership resulted in the studio regaining full ownership of Project Fantasy and its IP. VGC reported that IOI will continue the project independently after the Microsoft split, while GamesIndustry.biz described the previous arrangement as an Xbox deal to fund and publish the game.
For an IO Interactive RPG, that shift cuts both ways. Full ownership gives IOI control over the world, long-term direction, and any future expansion plan. It also removes the financial cushion of an external platform holder. IOI said it had to “find a new balance for the long-term future of the studio,” with attention on “the success of our main internal core titles instead of external projects and potential mobile game derivatives.” Game Developer quoted the same statement and framed the restructuring as IOI seeking stable footing after Xbox pulled funding.
That language suggests Project Fantasy is being moved closer to IOI’s core business rather than dropped as a risky side project. The company currently has several major internal responsibilities named across the reports, including 007 First Light, Hitman-related work, and Project Fantasy. IOI’s statement does not say how resources are being divided between them, and it does not identify whether the RPG’s scope, schedule, or online features have changed as a result of the funding loss.
The Istanbul closure is the human cost of the restructure
The Istanbul studio closure is the most concrete consequence of the Xbox cuts fallout for IOI. GamesIndustry.biz reported that IO Interactive will close IOI Istanbul following the loss of funding for Project Fantasy. The same report notes that the Istanbul branch opened in 2023 in the Sariyer district, where IOI said it hoped to establish “a foothold for AAA development in Türkiye.”
IOI said the restructuring includes “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.” Polygon reported that IOI asked the wider industry to support affected staff by sharing hiring opportunities. Game Developer said it is unclear how many employees worked at the Istanbul location.
This was not a satellite with no connection to the studio’s main output. GamesIndustry.biz reported that IOI Istanbul played “a significant role” in all IOI productions, including 007 First Light, future Hitman titles, and Project Fantasy. Game Developer reported the studio was expected to contribute to IOI’s triple-A productions across those projects. That makes the closure relevant beyond headcount. It removes a development hub from a studio attempting to self-fund a large online RPG while also maintaining marquee franchises.
What IOI has actually said about the RPG
Project Fantasy was publicly announced by IO Interactive in 2023 as a new IP and an online fantasy RPG. VGC quotes IOI’s announcement language: “We are building a new world, a new IP – an online fantasy RPG,” described as a world and game built to entertain players and expand for many years to come. Push Square also points to IOI’s official website, where the studio describes Project Fantasy as an “online fantasy RPG” inspired by the old Fighting Fantasy books.
The site description, as quoted by Push Square, emphasizes a group of individuals with different skills and strengths working together. For RPG players, that is the most useful design signal currently on record. It points toward party synergy, role differentiation, and cooperative identity, although IOI has not confirmed combat systems, classes, progression trees, quest structure, monetization, or whether the online format means shared-world play, instanced co-op, live-service progression, or something else.
The Fighting Fantasy reference is also worth treating carefully. Those books are associated with player choice, branching outcomes, and adventure structure, but IOI has not shown how that influence appears in Project Fantasy. As an RPG watcher, I would read it as a tonal and structural clue rather than a feature list. Until IOI demonstrates quests, builds, dialogue, or world progression, the confirmed facts remain broad: new fantasy IP, online RPG, long-term world ambitions, and continued development under IOI ownership.
Reports around Xbox involvement should be read in layers
There are several layers to the Xbox connection, and they are not all the same kind of evidence. IOI’s public statement says “external finance partnership” rather than naming Xbox in the quoted text. GamesIndustry.biz reported that Xbox withdrew from its agreement to fund and publish Project Fantasy. VGC wrote that the financial backer was later confirmed to be Microsoft. Kotaku reported that Microsoft confirmed its involvement in a statement to Bloomberg, after earlier reporting that two sources familiar with the project said Microsoft was indeed the partner.
Older reporting adds context but should not be treated as a current platform promise. VGC notes that Windows Central first claimed in April 2021 that IO had teamed with Microsoft on a new “dragon-themed IP” expected to be published as a first-party Xbox exclusive. IOI later announced the game itself in 2023 as an online fantasy RPG. The current IOI statement does not confirm exclusivity, platforms, a publisher, or release timing.
That distinction matters for anyone tracking Project Fantasy as a potential Xbox, PC, or PlayStation release. Once IOI says it owns and funds the IP independently, prior expectations about Xbox publishing no longer answer the platform question. The old deal may explain why players associated the RPG with Xbox, but the present status is simpler and less settled: IOI controls the project, Xbox-linked funding has ended, and no launch platforms have been announced in the provided source material.
RPG fans should watch scope, systems, and schedule next
For RPG fans, the encouraging part is that IOI is still publicly committing to Project Fantasy. The caution is that online RPGs are expensive, system-heavy projects, and IOI has now said it must fund the game independently while making staffing cuts. Nothing in the sources confirms a cancellation, but nothing confirms that the original production plan remains unchanged either.
The most important unknowns are the ones that affect the player experience directly. IOI has not announced a release date, platforms, price, beta timing, business model, offline support, party size, class system, quest format, endgame structure, or performance targets. The studio has also not explained whether the loss of external funding changes the game’s online ambitions. Kotaku reported that, according to one source, the game’s online ambitions had been scaled back after earlier Xbox cuts in 2025, but that is a report, not a feature confirmation from IOI.
Until IOI shows the game, the practical guidance is to treat Project Fantasy as active but unproven. If you are an RPG player looking for progression depth, meaningful builds, and authored choice, the Fighting Fantasy inspiration and team-composition language are promising signals. If you are wary of online RPGs with vague long-term plans, the lack of systems detail is the part to watch. The next useful update will need to move beyond commitment and answer how this world is played.
IOI is trying to protect the IP while absorbing the fallout
The throughline in IOI’s statement is preservation. The studio describes the Istanbul closure and layoffs as “hard, but necessary decisions” to retain IO Interactive’s long-term future as an independent AAA developer and publisher, and to give Project Fantasy “the best possible foundation to succeed” under its own direction. Push Square, Polygon, VGC, Game Developer, and GamesIndustry.biz all report the same essential outcome: Project Fantasy continues, but IOI is smaller after the financing split.
That puts the game in a complicated position. Regaining IP ownership is a strong foundation for a fantasy RPG meant to grow over years, because the world is no longer tied to an external publishing arrangement. Losing a studio branch and colleagues who contributed across IOI’s slate is a real production hit, especially for a developer balancing Bond, Hitman, and a new online RPG.
For now, Project Fantasy is neither vaporware nor a ready-to-hype release. It is an independently controlled IO Interactive RPG still in development after Xbox-linked funding ended, with the Istanbul studio closure marking the clearest cost of that transition. RPG fans should keep watching, but the next phase needs evidence: gameplay, systems, platforms, and a credible path to launch.