Double Fine Reduces Workforce by 23 Following Xbox Split

Double Fine, known for titles like Psychonauts 2, Keeper, and Kiln, announced on Tuesday that it will be laying off 23 developers following Xbox’s decision to divest from the studio.

“As a small, closely-knit team, these decisions are incredibly difficult,” stated Double Fine founder Tim Schafer on the studio’s Bluesky account. “Only the survival of our studio would lead us to consider such a painful choice. Our shift to becoming an independent company also means we need to adjust our size to what we can sustain.”

Schafer expressed that the departing team members are invaluable, having significantly contributed to the studio’s games and culture, and their absence will be deeply felt.

Earlier this month, Double Fine regained its independence as part of a significant restructuring at Xbox that is impacting thousands of developers and various studios. Reports indicate that around 90 people were on staff at Double Fine at the time of the layoffs.

Founded in 2000 by Schafer and other former LucasArts employees, Double Fine gained a reputation for its unique and quirky games, starting with the critically acclaimed Psychonauts in 2005. Subsequent titles like Brutal Legend, Stacking, and Broken Age solidified its status as one of the most innovative independent developers in the industry.

In 2019, Xbox acquired Double Fine during the challenging development of Psychonauts 2, a journey documented in the YouTube series PsychOdyssey. The game was released to critical acclaim and even received a Game of the Year nomination at The Game Awards, while Keeper, released in 2025, was praised for its atmospheric adventure gameplay.

Earlier this year, Double Fine unionized and launched Kiln, a multiplayer pottery game that struggled to gain traction. A few months later, Xbox’s new CEO, Asha Sharma, announced the decision to part ways with Double Fine, along with Compulsion Games, Ninja Theory, and Undead Labs, emphasizing that it is neither feasible nor desirable to own every great independent studio.

This shift has forced Double Fine to navigate the challenges of independence once more during a particularly tough period for the gaming industry, especially for mid-sized studios. It is the first of the four studios to publicly announce layoffs, with the Bluesky post affirming Double Fine’s commitment to supporting those affected as best as possible.