'These are hard, but necessary decisions' — Xbox pulled funding for Io Interactive's 'Project Fantasy' but the developer will continue working on the game independently

• IO Interative has regained the rights to its online fantasy RPG, Project Fantasy
• Xbox pulled funding from the project, ending its parternship with the 007 First Light studio
• IOI will continue working independently on the project, but a studio will be closed down and some workers will be laid off

Last week, 007 First Light and Hitman developer Io Interactive confirmed that it had ended its relationship with an external financial backer for Project Fantasy, which was later revealed to be Xbox (via Bloomberg).

As a result of Xbox pulling out of the deal and amid major restructuring at Microsoft that has seen thousands of layoffs, IOI has announced that it has regained full ownership of Project Fantasy and will continue work on the project independently. However, its Istanbul studio will be shuttered, and an unconfirmed number of workers will be laid off.

"Dear gaming community. Following the end of our external finance partnership on Project Fantasy, IOI has regained full ownership of the project and our IP," the studio said in a statement on social media.

"We will continue to develop and fund it independently amongst our other projects. With this context, we had to find a new balance for the long-term future of the studio, focused on the success of our main internal core titles instead of external projects and potential mobile game derivatives. This has meant making changes as well as proposed changes across our studios: the closure of our Istanbul studio and starting a process to part ways with colleagues who have been a meaningful part of what makes IOI what it is.

"Our immediate focus is on supporting those affected as best we can through this period. If you are aware of any opportunities within your network, we would be genuinely grateful for any support you can offer to any of the talented people across IOI who might be looking for new opportunities."

IOI concluded: "These are hard, but necessary decisions, in order to retain the long-term future of IO Interactive as one of the very few fully independent AAA developer and publisher, as well as to give Project Fantasy the best possible foundation to succeed under our own passion and direction. Project Fantasy is a game, a world, and an IP that we are wholly committed to, and we cannot wait to share the love with you."

Yesterday, Xbox CEO Asha Sharma outlined the company's plan to "reset" and announced it will cut a total of 3,200 jobs, starting with 1,600.

In addition, the company also plans to ditch four studios, including Compulsion Games and Double Fine Productions, which are going independent once more, while Ninja Theory and Undead Labs look for new ownership.

Dishonored developer Arkane Studios is also "beginning required consultation with its Works Council to review potential strategic options," but due to French labor laws, the process will take longer.