Double Fine cuts 23 jobs after leaving Xbox

Double Fine Productions, the acclaimed studio behind the "Psychonauts" series, has laid off 23 employees as it completes its transition back to an independent company following its separation from Microsoft's Xbox division. The layoffs, confirmed by studio founder Tim Schafer on July 28, 2026, represent a reduction of roughly 25 percent of the studio's workforce, which was previously estimated at around 90 people.

In a statement posted on social media, Schafer described the decision as painful but necessary for the studio's survival. "Only the survival of our studio would ever make us consider such a painful action," Schafer wrote. "Our transition to becoming an independent company also means becoming a size that we can sustain." He emphasized that those affected were important contributors, stating, "The people we are losing were all important. They all made an impact on our games and culture, and they will be missed." The studio said it is committed to supporting the affected employees.

The move comes shortly after Double Fine fully returned to independent management, regaining ownership of its intellectual property and game catalog. An Xbox spokesperson confirmed the...