Full Breakdown
IO Interactive Closes Istanbul Studio After Xbox Withdraws Funding for Project Fantasy
7/8/2026, 12:21:33 PM
Closure of Istanbul Studio Following Xbox Funding Withdrawal
IO Interactive announced the shutdown of its Istanbul studio after Xbox withdrew financing and publishing for the online fantasy RPG Project Fantasy. The “hard, but necessary” decision aims to safeguard IOI’s long-term independence as a fully independent AAA developer and publisher.
Background: Project Fantasy and IO Interactive’s Expansion
Project Fantasy was announced in 2023 with Xbox financing. That year IOI opened the Istanbul studio to create a AAA hub in Turkey, complementing its Copenhagen, Brighton, Barcelona and Malmö sites. The Istanbul team contributed to 007 First Light, Hitman and Project Fantasy.
Timeline of Key Developments
- 2023 – Istanbul studio opened; Project Fantasy announced.
- July 2026 – Xbox ends funding; IOI regains full ownership of Project Fantasy.
- July 2026 – Istanbul studio closure announced.
Official Statements & Responses
IO Interactive said the loss of external financing required a “new balance” focused on its core internal titles. The company stressed its commitment to develop and fund Project Fantasy independently, describing the studio closure as essential to retain its independent AAA status. Xbox, speaking to Bloomberg, said it ceased supporting Project Fantasy after reassessing its investment focus, noting a restructuring that includes 3,200 layoffs—1,600 immediate—and the spin-off of five studios: Compulsion Games, Double Fine Productions, Ninja Theory, Undead Labs and Arkane Studios.
Conflicting Reports & Gaps
Sources do not disclose how many employees were affected by the Istanbul shutdown or the total size of IOI’s layoff. Xbox’s rationale beyond “reevaluating the types of projects” is not detailed, and no direct comment from Xbox was obtained.
Verbatim Quotes
- “These are hard, but necessary decisions, in order to retain the long-term future of IO Interactive as one of the very few fully independent AAA developer and publisher, as well as to give Project Fantasy the best possible foundation to succeed under our own passion and direction,” — IO Interactive, official statement
- “Following the end of our external finance partnership on Project Fantasy, IOI has regained full ownership of the project and our IP. We will continue to develop and fund it independently amongst our other projects. With this context, we had to find a new balance for the long-term future of the studio, focused on the success of our main internal core titles instead of external projects and potential mobile game derivatives,” — IO Interactive, X post
- “Our immediate focus is on supporting those affected as best we can through this period.” — IO Interactive, press release
- “This [resulted in] the closure of our Istanbul studio and [parting] ways with colleagues who have been a meaningful part of what makes IOI what it is,” — IO Interactive, announcement
What’s Next
IO Interactive will fund Project Fantasy with internal resources while focusing on its Hitman and 007 franchises. Xbox’s restructuring suggests fewer external partnerships in the near term, leaving IOI to develop without external financing.
