IO Interactive’s Istanbul Studio Shuttered as Xbox Funding Dries Up
In a move that’s sending shockwaves through the VR community, Danish developer IO Interactive (IOI) has announced it will be closing its Istanbul studio. The decision comes on the heels of Xbox pulling funding for Project Fantasy, an ambitious online RPG that had been in development since 2023. Despite regaining full ownership of the project, IOI says it must now “find a new balance” to ensure the long-term future of the studio.
The closure of IOI Istanbul marks a significant shift in the studio’s plans, which had once envisioned establishing a hub for triple-A development in Turkey. The studio was formed just three years ago and had been working on several high-profile titles, including 007 First Light and Hitman. It’s unclear how many employees will be affected by the closure, but IOI has confirmed that it will be “parting ways” with colleagues who have contributed to the studio’s success.
According to an official statement from IOI, the decision to close the Istanbul studio was a necessary one in order to retain the studio’s independence as a fully self-funded AAA developer and publisher. The company claims that regaining control of Project Fantasy has allowed it to refocus on its core titles, but that this also requires making tough decisions about which projects to prioritize.
One thing is clear: IOI remains committed to bringing Project Fantasy to market, despite the setbacks. In a statement, the studio expressed its passion for the game and its determination to share it with fans worldwide. With its reputation as one of the most innovative VR developers in the industry, IOI’s dedication to pushing the boundaries of immersive storytelling is unlikely to waver.
As VR enthusiasts, we’re keenly interested in how this development will impact IOI’s future plans. Will Project Fantasy continue to be a flagship title for the studio? Can IOI maintain its reputation as a leader in AAA game development despite these challenges? One thing is certain: with its unwavering commitment to innovation and excellence, IOI will continue to push the boundaries of what’s possible in VR.
The closure of IOI Istanbul marks a significant shift in the gaming landscape, but it also underscores the importance of adaptability and resilience in the face of uncertainty. As the industry continues to evolve at breakneck speed, one thing is clear: only the most agile and innovative developers will thrive in this new era of immersive storytelling.
Source: Game Developer XR — 2026-07-07