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IO Interactive's Project Fantasy Loses External Partner, Development Continues

The loss of a major publisher like Xbox forces IO Interactive to either self-fund a large-scale online RPG or find a new partner, testing the studio's independence after it previously survived by going its own way post-Hitman.

Key Facts

  • IO Interactive announced on July 1, 2026, that its partnership with an external publisher for the online fantasy RPG Project Fantasy has ended.
  • Bloomberg and other outlets reported that the partner was Microsoft's Xbox division, which declined to deny the withdrawal.
  • An Xbox spokesperson told Bloomberg the company is re-evaluating its investment priorities and focusing on the highest priority areas.
  • IO Interactive stated on X that it is 100% committed to Project Fantasy and that the game will definitely see release, though personnel adjustments have occurred.

Reporting from 4 sources: 4Gamer.net, Denfaminicogamer, GameBusiness.jp, Game Spark.

IO Interactive's Project Fantasy Loses External Partner, Development Continues

IO Interactive, the studio behind the Hitman series and the upcoming 007 First Light, announced on July 1, 2026, that its partnership with an external publisher for the online fantasy RPG Project Fantasy has ended. The studio did not name the partner, but Bloomberg and other outlets reported that the partner was Microsoft's Xbox division. An Xbox spokesperson told Bloomberg that the company is reassessing its investments and focusing on top priorities, without denying the withdrawal. The split follows a broader organizational reset at Xbox announced in June 2026, which has led to layoffs and project cancellations across the division. IO Interactive stated that Project Fantasy is an IP it owns and remains fully committed to, saying in a post on X that the game will definitely see release. The studio also confirmed that the development team has been reorganized and that personnel adjustments have occurred as a result of the partnership ending. Project Fantasy was first announced in 2023 as a new online fantasy RPG designed for long-term expansion, with few details revealed since. Documents from the Activision Blizzard acquisition case previously linked IO Interactive's Project Dragon to an Xbox publishing deal, which outlets have identified as the same project.

IO Interactive said in its statement on X that it is "100% committed" to the project and that "this wonderful world will definitely see the light of day." The studio also confirmed that personnel adjustments have taken place as part of a reorganization of the development team.

Bloomberg reported that an Xbox spokesperson said the company is "re-evaluating our investment priorities and focusing on the highest priority areas." The spokesperson added that Xbox is "not reducing overall investment in games" and that "the amount of investment in content is expected to be roughly the same as last year. What changes is where we invest and what types of projects we support."

The withdrawal follows a company-wide message Xbox released on June 10, 2026, stating it would "reset the business for a stronger Xbox" and that it "needs to review investment priorities for the next five years."

According to Kotaku, the game had already been forced to scale down its online elements at the time of Xbox's layoffs in summer 2025. Documents from the Activision Blizzard acquisition case previously listed PC and Xbox Series X|S as supported platforms for a project called "Project Dragon," which outlets including IGN have identified as the same as Project Fantasy.

Synthesized by Yomimono from the 4 cited sources below, including Japanese-language reporting where cited, then editorially reviewed before publishing.

Project Fantasy IO Interactive

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