Double Fine Announces Layoffs Following Split From Xbox

Renowned developer Double Fine Productions has been directly impacted by Xbox’s recent corporate restructuring, which involved spinning off five distinct studios. Although the beloved studio successfully avoided total closure, this sudden transition to independence has unfortunately necessitated significant workforce reductions, resulting in 23 staff members losing their positions.

In a heartfelt statement published on social media, studio founder and veteran director Tim Schafer addressed the difficult decision: “As a small, tightly-knit team, these actions are not taken lightly. 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.” Schafer added that the management team is doing everything possible to support the affected employees through this challenging transition.

Earlier this month, Double Fine regained its operational independence from Xbox alongside Compulsion Games, the studio behind South of Midnight. Fortunately, both developers managed to retain ownership of their respective intellectual properties and game portfolios. Meanwhile, the broader Xbox divestment strategy has yielded varied outcomes: Ninja Theory and Undead Labs were acquired by external buyers, whereas Arkane Studios faces an uncertain trajectory amid ongoing mandatory corporate consultations in France.

Double Fine’s most recent creative endeavor is Kiln, a pottery-inspired multiplayer brawler released this past April. During their tenure under Xbox’s umbrella, the studio successfully delivered critically acclaimed titles including Psychonauts 2 in 2021 and Keeper in 2025.