IO Interactive, Developer of 007 First Light and Hitman, Confirms Layoffs After Fantasy Project Loses External Partner

IO Interactive, the studio behind 007 First Light and the Hitman series, has announced layoffs following an unexpected setback with its upcoming fantasy game, which was reportedly set to be published by Xbox. The Danish developer took to social media to confirm that a relationship with an 'external partner' working on the fantasy title had ended. As a result, IO Interactive is laying off an unspecified number of employees, though it stressed its commitment to supporting those affected. These layoffs appear to be unrelated to the successful launch of 007 First Light, which the studio celebrated in the same announcement. While IO Interactive did not name the external partner, the fantasy project—previously known as Project Dragon—was listed in a leaked FTC vs. Microsoft trial document from 2023 as an Xbox and PC exclusive published by Xbox Game Studios. This news comes ahead of expected major restructuring at Microsoft, which reportedly plans a 'reset' for the Xbox brand, including studio closures, game cancellations, and mass layoffs. Unionized Xbox employees are pushing back to secure protections, but the outcome remains uncertain.