Double Fine lays off 23 staff three weeks after regaining independence from Xbox

Double Fine Productions has laid off 23 employees, just three weeks after Xbox cut the studio loose as part of its broader July restructuring that put 3,200 people out of work. Studio head Tim Schafer confirmed the cuts in a statement posted to Bluesky.

Schafer's statement was direct: "Only the survival of our studio would ever make us consider such a painful action. Our transition to becoming an independent company also means becoming a size that we can sustain." Bloomberg's Jason Schreier reported that Double Fine had around 90 employees before the cuts, meaning roughly 25% of the workforce is gone. Several affected staffers had been at the studio for over a decade. Xbox, for its part, distanced itself entirely — a spokesperson told Kotaku that Double Fine "fully returned to independent management earlier this week, with their IP, catalog, and runway for their next games," and that the studio now manages its own operations.

Double Fine — the studio behind Psychonauts, Brutal Legend, and Broken Age — has always operated as a smaller, quirky developer making games that earn critical love but rarely massive commercial numbers. That model worked under Microsoft's umbrella, but sustaining it independently, especially in the current industry climate, is a different challenge. Compulsion Games, the other studio Microsoft spun off at the same time, was already signaling financial strain just one week after going indie, with employees publicly looking for new work. The pattern suggests that Xbox's decision to grant independence, while framed generously, left these studios to absorb serious structural costs on their own.

The Double Fine community and broader games industry have responded with solidarity toward those laid off, many of whom had long tenures at the studio. What comes next for Double Fine — what projects they're pursuing, how they plan to fund development independently — remains unannounced.