IO Interactive acquires Project Fantasy IP, but closes Istanbul studio

Q: How will IO Interactive’s independent funding of Project Fantasy affect its expected release window compared to when Microsoft was involved?

IO Interactive says it will now develop and fund Project Fantasy independently after regaining full ownership, which likely means the scope of the project will change and the release window could be delayed compared to when Xbox was funding it. The primary article states the scope will likely change now that external financing ended, implying a later or altered release timeline.

Q: Will Project Fantasy still target Xbox platforms now that Microsoft’s external financing ended and IOI holds the IP?

Yes. The article says IO Interactive regained full ownership of Project Fantasy after the end of the external finance partnership and will continue to develop and fund it independently, implying it will no longer be an Xbox-funded project but remains under IOI control.

Q: What impact does the Istanbul studio closure have on which IOI teams are continuing Project Fantasy development?

The Istanbul studio closure means those Istanbul-based teams are no longer part of IO Interactive, but IOI says it has regained full ownership of Project Fantasy and will continue to develop and fund it independently with its remaining internal teams. The primary article does not list which specific IOI teams or studios will continue Project Fantasy development.

Q: Does IO Interactive intend to continue pursuing mobile derivatives for its projects after refocusing away from external projects?

Yes. IO Interactive said it will focus on success of its main internal core titles instead of external projects and potential mobile game derivatives, implying it will move away from pursuing mobile derivatives after refocusing.

Following Xbox's recent layoff news, IO Interactive has secured IP and publishing rights for its new game, Project Fantasy, but has also closed a studio.

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Derek Strickland

Senior Gaming Editor

Published Jul 7, 2026 5:35 PM CDT

1 minute & 15 seconds read time

TL;DR: IO Interactive regained full ownership and publishing rights of Project Fantasy after Xbox ended funding, but has closed its Istanbul studio and laid off staff to focus on core internal titles and independently develop the game. The project's scope may change moving forward.

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IO Interactive shares some updates on what's next for the studio, confirming that it has acquired the rights to its latest new game.

IO Interactive acquires Project Fantasy IP, but closes Istanbul studio 2

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007 First Light developer IO Interactive has ambitious ideas for a very different new kind of game. It's called Project Fantasy, and reports indicate that it could have flying dragons set in a world of myth and mystery. Originally, Xbox had been funding the project, but that deal got scrapped after Microsoft set the reset switch on its gaming business. Now IO Interactive has managed to get both the publishing and IP rights to Project Fantasy.

Unfortunately, the studio has also announced layoffs and the closure of its studio in Istanbul, Turkey.

Read more: 007 First Light developer hit with layoffs as Xbox pulls out of Project Fantasy deal

"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," IO wrote on Twitter.

"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. This has meant making changes as well as proposed changes across our studios: 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."

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