Xbox has terminated its agreement to fund and publish IO Interactive's Project Fantasy, with job reductions anticipated

Project Fantasy, an online RPG developed by IO Interactive, will no longer be financed or published by Xbox, potentially causing job reductions. Despite this, IO Interactive has expressed a firm commitment to completing Project Fantasy and ensuring it is released, even as the company navigates upcoming challenges that may affect the workforce.

An Xbox representative informed Bloomberg that the company is revising its investment strategy to focus on top priority areas, while maintaining its overall investment level in gaming. "Our approach isn't about reducing our budget but rather shifting our focus on the types of projects we support," the spokesperson clarified.

This announcement aligns with upcoming job reductions at Xbox, slated to begin soon. Reports have suggested that additional studio shutdowns might occur, including Arkane Studios Lyon. Microsoft is reportedly evaluating the option of selling certain development studios, with discussions having surfaced regarding Compulsion Games, Double Fine, and Ninja Theory.

Xbox CEO Asha Sharma stated last month that the company is reevaluating its investment strategy for the next five years, indicating a need to reduce reliance on external vendors to foster a more independent engineering culture.

Amidst these developments, the Communications Workers of America (CWA) union has voiced its support for employees in Microsoft's gaming sector, asserting the importance of the workforce to Xbox's value creation. Frank Acre, VP of CWA District 9, stated that staff "won't be treated as disposable."

In response to these declarations, Xbox affirmed its respect for employees' rights to express themselves and highlighted its history of collaborative efforts with labor organizations through various finalized bargaining agreements with the CWA. The company remains committed to ongoing negotiations to establish agreements across Xbox.