The James Bond game was supposed to be one of the most exciting new IP launches in years. Now the studio behind it is dealing with something far less glamorous: layoffs.
IO Interactive, the Copenhagen-based developer best known for the Hitman World of Assassination trilogy and the upcoming 007 First Light, has confirmed cuts to its workforce. The timing is no coincidence. This comes directly in the wake of Microsoft and Xbox's sweeping July 2026 restructuring, which is set to remove roughly 20% of Xbox's total staff, with the first wave already accounting for 1,600 positions across the division.
What the Xbox reset means for studios outside the walls
Here's the thing: IO Interactive is not a first-party Xbox studio. But the scale of what Microsoft is doing right now sends shockwaves well beyond its own buildings. The July 2026 round of cuts is the largest single Xbox restructuring event since the $68.7 billion Activision Blizzard acquisition closed in October 2023. Studios like Double Fine, Compulsion, Ninja Theory, and Undead Labs are all exiting Xbox in various forms. Rare's long-in-development Everwild was canceled outright. Turn 10 Studios, the team behind Forza Motorsport, reportedly lost close to 50% of its staff.
The broader Microsoft cut affected over 9,000 employees globally in July 2025, and the current 2026 wave is expected to match or exceed that impact within Xbox specifically. When publishers and platform holders pull back this aggressively, partner studios and third-party developers feel the pressure almost immediately, whether through canceled contracts, reduced publishing support, or internal budget reviews.
The timing around 007 First Light
007 First Light is IO Interactive's most ambitious project to date, a Bond origin story featuring Patrick Gibson in the lead role alongside a cast that includes Lenny Kravitz. You can check out the full 007 First Light voice cast guide for every actor and character confirmed so far.
The game has been in development for several years and was positioned as the studio's flagship title for this generation. Layoffs at any point in a game's lifecycle are disruptive, but cuts this close to or shortly after a major release raise real questions about what comes next for the studio and the IP.
The story IO Interactive is telling with this game, right down to the 007 First Light ending and Bond's choice of his iconic 007 designation, was clearly designed to set up a longer arc. Whether those plans survive the current headcount reduction depends on how deep the cuts run and what the studio's publishing and financial arrangements look like going forward.
A pattern that keeps repeating
Xbox's restructuring history since the Activision Blizzard deal reads like a grim timeline. January 2024 brought 1,900 cuts. May 2024 saw Arkane Austin, Tango Gameworks, and Alpha Dog shuttered. September 2024 added another 650 roles. July 2025 escalated to over 9,000 Microsoft-wide cuts, with Halo Studios, Raven Software, Sledgehammer Games, and High Moon Studios all impacted. The Initiative was shut down entirely, taking the Perfect Dark reboot with it.
Now in July 2026, the cuts are accelerating again. Xbox CEO Asha Sharma has publicly stated the Xbox business is "not healthy," pointing to risky bets and a Game Pass model that has not performed as originally envisioned. That kind of candor from a platform CEO is rare, and it signals that the restructuring is not close to finished.
For IO Interactive, a studio that has spent years building toward a Bond game with genuine ambition, the layoffs are a painful reminder that no corner of the industry is fully insulated from what happens at the top of the platform food chain. If you are planning to jump into the game and want a head start, the 007 First Light preload guide covers download sizes and regional start times across all platforms. The game itself still exists. The question now is what the studio looks like on the other side of these cuts.
