007 First Light’s developer lays off staff but claims its next franchise will continue

IO Interactive lost an external partner for ‘Project Fantasy’ — which was reportedly Microsoft.

IO Interactive lost an external partner for ‘Project Fantasy’ — which was reportedly Microsoft.

by Jay Peters

Jun 30, 2026, 6:14 PM UTC

Image: IO Interactive

Jay Peters

is a senior reporter covering technology, gaming, and more. He joined The Verge in 2019 after nearly two years at Techmeme.

IO Interactive, the studio behind the Hitman series and 007 First Light, announced that it is laying off staff after a relationship with an “external partner” on its next big franchise, Project Fantasy, “has come to an end.” IO has described Project Fantasy as an “online fantasy RPG”, and Kotaku and Bloomberg report that Microsoft, which is planning significant cuts as part of a broader “reset” of the Xbox business, was going to be the game’s publisher.

It’s unclear how many people will be affected by IO’s “staffing decisions.” The company says “we are fully committed to supporting those affected through this challenging transition.” IO also notes that it remains “100% committed to” Project Fantasy and promises that “this wonderful universe will see the light of day.”

An Xbox spokesperson, in a statement to Bloomberg, says that the company is “taking a fresh look at where we invest so we’re focusing on our highest priorities.” The spokesperson adds that Xbox is “not reducing our overall investment in games” and that “We expect to invest about the same in content as we did last year. What’s changing is where we’re investing and the kinds of projects we’re backing.”

IO and Xbox didn’t immediately reply to a request for comment from The Verge.

Here is IO’s full message about the changes, from X:

Dear gaming community,

For a good while, it has been all positive news from IO Interactive. We remain humbled and honored by the response to our latest outing with a young, unproven Bond. A bold new story and a take on one of the most famous characters in entertainment, which the world has embraced with love.

However, today we have to share some more downbeat news. A relationship with an external partner on our own IP, Project Fantasy, has come to an end. This means we have to adapt to this new reality and its short-term consequences, including staffing decisions, which is what is happening as we write this update, and we are fully committed to supporting those affected through this challenging transition.

Project Fantasy is a game, a world, and an IP that we absolutely love and remain 100% committed to, now and in the future. This wonderful universe will see the light of day.

The layoffs follow the success of 007 First Light, which was released in May and quickly sold 3 million copies. In a recent interview with The Verge, Amazon’s games boss wouldn’t confirm if IO would be the developer of a potential sequel, but noted that Amazon will figure out who is making the next Bond game “as the dust settles on this one.”

Update, June 30th: Added information from Bloomberg’s report.

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