Microsoft Corp.’s Xbox division has backed out of a deal with IO Interactive to fund and publish a new game, as the company re-evaluates investment decisions.
IO Interactive, the maker of “Hitman” and popular new release “007 First Light,” plans to continue to develop the game, which has the code name “Project Fantasy.” However, the Copenhagen-based video game developer will be forced to find other funding or publish the game itself.
In a statement to Bloomberg News, an Xbox representative told the outlet the company is “taking a fresh look at where we invest so we’re focusing on our highest priorities.”
“We’re not reducing our overall investment in games,” the rep added. “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.”
The cancellation of the deal follows rumors that Xbox is preparing for significant job cuts, with new CEO Asha Sharma outlining an upcoming “reset” in a memo to staff earlier this month.
Prolific video game producer Hideo Kojima’s much anticipated-game “OD” is set to survive Microsoft and Xbox’s big business “reset,” according to a source familiar with Microsoft’s plans, who says the upcoming horror game will remain in the works at Kojima Productions and with Xbox publishing, even as Microsoft reassesses its video game investments.
On Tuesday, IO Interactive released a statement via X regarding Xbox’s decision to pull out of “Project Fantasy.” The publisher clarified that it has “to adapt to this new reality and its short-term consequences, including staffing decisions, which is what is happening as we write this update.” IO Interactive added that it is “fully committed to supporting those affected through this challenging transition,” concluding with, “‘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.”