007 First Light Dev's Next Game Is The First Casualty Of Xbox's 'Bloodbath'

007 First Light developer IO Interactive has found a lot of success with its latest game, though it looks like its next game might already be in trouble following a new update.

IO Interactive announced an online fantasy game under the working title Project Fantasy in 2023, and given the studio’s success with games like 007 First Light and Hitman World of Assassination, it seems like a shoo-in for the developer.

Despite this, a new update from IO Interactive reveals that the project may now be in jeopardy, with an “external partner” ending their relationship and pulling funding.

“A relationship with an external partner on our own IP, Project Fantasy, has come to an end,” reads the statement. “This means we have to adapt to this new reality and its short-term consequences, including staffing decisions, which is what is happening as we write this update, and we are fully committed to supporting those affected through this challenging transition.”

Although IOI is vague about the identity of this third party, it was later reported by Bloomberg’s Jason Schreier that this entity was Microsoft’s Xbox.

According to a spokesperson from Microsoft, Xbox is “taking a fresh look at where we invest, so we’re focusing on our highest priorities.”

“We're not reducing our overall investment in games,” the spokesperson added. “We expect to invest about the same in content as we did last year. What's changing is where we're investing and the kinds of projects we're backing.”

Read More: 5 Xbox Studios Set For Potential Closure Amid ‘Massive’ Industry-Changing Layoffs

Project Fantasy Could Be The First Casualty Of Many In This 'Bloodbath' From Xbox

This update from IO Interactive is expected to be the first of many as part of the reported “bloodbath” as Xbox makes job cuts and studio closures in the following weeks.

“A lot of these studios made plenty of their own mistakes, but in a lot of ways they're being punished today for following orders, for listening to what they were told a few years ago,” Schreier said in a separate report.

“That is just a shame, and what is going to happen is pretty brutal. The word bloodbath has been thrown around among people I talk to who know about what's going to happen. It's going to be bad.”

The current roster of studios, which are rumoured to be on the chopping block, includes Double Fine Productions, Compulsion Games, Ninja Theory, and Undead Labs.

It’s also been reported that Arkane Studios could also be included in this wave of closures, with Marvel’s Blade also cancelled.

Previously, Double Fine, Compulsion, and Ninja Theory had all released games which were critical darlings but were not as successful financially. These were Keeper, South of Midnight, and Senua’s Saga: Hellblade II, respectively.

Meanwhile, Undead Labs announced State of Decay 3 in 2020, though the game has not been released yet in the six years since then.

Despite the studio giving it the biggest showcase yet last month, it seems that Microsoft may also be eyeing it up as a potential closure.

READ MORE: 007 First Light Is Finally The Game That Gets Bond Right