Xbox ends publishing deal with IO Interactive - layoffs threaten

Microsoft has pulled the plug on the publishing deal with IO Interactive for Project Fantasy, an online fantasy RPG. The Danish studio behind Hitman is restructuring and may lay off staff.

The terminated deal concerned the online fantasy RPG Project Fantasy. Both Microsoft and IO Interactive have confirmed the termination.

Hitman remaster still on the way

Remarkably, Microsoft only announced the HITMAN Classic Trilogy Remastered for Xbox Series X|S a few weeks ago during Summer Game Fest. That compilation of the original three Hitman games (Codename 47, Silent Assassin and Contracts) will be released in 2027 in collaboration with Saber Interactive and IOI. This suggests that the ties between Xbox and the studio have not been completely severed, but missing out on a larger publishing deal could still have painful consequences for the workforce.

This is not the first time this year that a major publisher has revised its plans with a partner. The industry is grappling with a wave of layoffs and canceled projects, partly due to rising development costs and an overheated market. Earlier this month, EA announced further layoffs ahead of the sale to Saudi Arabia - a sign that even the biggest players are cleaning up their portfolios.

For IO Interactive, which took control of its own destiny after the departure of publisher Square Enix in 2017 with the World of Assassination trilogy, a disappointing deal would be a major blow. The studio had built a strong reputation in recent years as an independent powerhouse, thanks in part to steady revenue from Hitman and the announcement of a James Bond game (Project 007). The James Bond game has since been released as 007 First Light on May 27, 2026 for PS5, Xbox Series X/S and PC, with a Switch 2 version later. The game has been well received and commercially successful.

We are closely monitoring the situation. For now, it remains to be seen whether Microsoft and IOI will issue a statement, and whether the rumors about layoffs come true. What do you think: is this a strategic choice by Xbox or a missed opportunity for both parties?