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.