Credit: Image Credit: IO Interactive
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IO Interactive closes Istanbul studio after Project Fantasy funding loss
July 8, 2026·3 min read
IO Interactive is closing its Istanbul studio and laying off staff after the Hitman developer lost external financing for Project Fantasy, its in-development online fantasy RPG. The company has regained full ownership of the project and its IP, but the change has forced cuts across the business.
The external partner was Xbox, which had been tied to Project Fantasy through Microsoft’s publishing arm. IO Interactive has not named Xbox in its own statement, but the timing links the move to Microsoft’s latest gaming cuts and investment changes.
The end of IO Interactive’s finance partnership has led to “short-term consequences,” including staffing decisions. The studio also confirmed it is closing IOI Istanbul, one of several satellite offices opened during its push to work on multiple projects at once.
The company did not give a number for the layoffs. It said its immediate focus is supporting affected employees, while adapting to the loss of outside funding for Project Fantasy.
Project Fantasy has not been canceled. IO Interactive remains fully committed to the game, and the project will “see the light of day” even after the financing deal ended.
The game was first announced in 2023 as a new original fantasy RPG from a studio best known for stealth sandboxes and systemic assassination design. IO described it at the time as an online fantasy project built around a new world, but it has shown little publicly beyond concept art and broad positioning.
The cuts show how Microsoft’s Xbox changes are affecting studios beyond its own first-party teams. Xbox has been reducing staff, reassessing projects and shifting money toward higher-priority releases after years of acquisitions and heavy content spending.
For IO Interactive, the loss is different from a normal project delay. External publishing and financing deals often pay for staff, production milestones and long development timelines. Losing that support can force a studio to cut costs quickly, even when the game itself is still planned.
IO Interactive is not a single-project studio anymore. Hitman World of Assassination remains active, while 007 First Light has pushed the developer into one of the biggest licensed properties in games.
That made Project Fantasy an important test of IOI’s next phase. It was meant to prove the studio could build its own new IP alongside Hitman and Bond. The Istanbul closure now slows that expansion, even if the fantasy RPG remains in production.
IOI Istanbul was listed alongside the company’s Copenhagen, Malmö, Barcelona and Brighton locations. The Turkish office was part of a larger studio network built to support IO Interactive’s bigger development slate.
The confirmed status is now clear for players and staff watching the project. IO Interactive will keep Project Fantasy, but it is doing so with fewer people, one less studio location and no confirmed replacement funding partner.
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