While we’re still awaiting the biggest hammer to fall in the Xbox cuts that have been anticipated since the company’s “reset” memo in early June, the dribble of bad news preceding them continued on Tuesday, as Hitman maker IO Interactive lost funding from Xbox, and as a report suggested Xbox could axe the rest of Dishonored creator Arkane.
IO Interactive, which released 007 First Light in late May, announced today that “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.” Bloomberg reported that the “external partner” in question was Xbox, with an Xbox spokesperson telling the outlet that Xbox is “taking a fresh look at where we invest so we’re focusing on our highest priorities.”
“Project Fantasy” is an original IO game that the company announced in 2023, calling it “an online fantasy RPG.” In 2021, it was rumored to be an Xbox exclusive, which led many people today to presume Xbox was the unnamed partner referenced in IO’s announcement prior to Bloomberg confirming their suspicions. IO wrote that, despite this setback, it is “100% committed to [Project Fantasy], now and in the future.”
IO’s announcement is one knot in a string of bad news that’s been swirling around the Xbox cuts, which both Bloomberg and The Verge report will begin on July 6, following the close of Microsoft’s fiscal year. The Verge also reported Tuesday that Xbox is considering canceling Arkane’s Blade game, first announced at The Game Awards in 2023, and could be looking into selling off the France-based studio. The studio’s American wing, Arkane Austin, was closed by Microsoft in May 2024, alongside several other studios. Arkane is known for the Dishonored series and 2021’s Deathloop.
All this is happening alongside Microsoft reportedly looking to offload other studios, either through closures or sales, including South of Midnight studio Compulsion, Psychonauts maker Double Fine, Hellblade creator Ninja Theory (which announced the third game in the series at Summer Game Fest, in a move GameFile reported was to attract potential investor interest in the studio), and State of Decay studio Undead Labs. It’s not clear yet what will ultimately happen to these studios, though in Compulsion’s case, many of its employees have been publicly looking for new work.
Whether these studios survive as independent entities or are destroyed by Xbox’s endless rake-stepping, the lives of an as-yet unknown number of people will be upended once the company finally starts its destruction in earnest. None of this is new for Xbox, which has been inflicting harm on the studios it owns and the workers it employs for years now. What these studios, the company, and the wider video game industry stand to look like after all this can’t be predicted, but it’s not shaping up to be anything good.
