Double Fine Announces Layoffs Following Split From Xbox - Game Informer

What the report says

Game Informer reported that Double Fine Productions, the studio known for Psychonauts, is laying off 23 employees after separating from Xbox during a wider restructuring. The July 28 report said the studio was one of five teams spun out of Xbox and avoided being shut down, but its return to independence has led to staff reductions.

According to the report, Double Fine founder and head Tim Schafer announced the cuts in a social media post, describing the decision as a painful step tied to the studio’s ability to continue operating. Double Fine said it is assisting the departing employees during the transition. The article did not identify the affected roles or provide further details on severance or future staffing plans.

Game Informer said Double Fine and Compulsion Games, the developer of South of Midnight, were granted independence from Xbox earlier in July and kept their intellectual property and game catalogs. The report also said Xbox spun off three other studios: Ninja Theory and Undead Labs were sold to unnamed buyers, while Arkane Studios’ status remains unresolved as it goes through required consultation in France.

The layoffs matter because they show how the effects of Xbox’s restructuring are continuing even for studios that were not closed outright. Game Informer noted that Double Fine’s recent releases under and after Xbox ownership include Psychonauts 2 in 2021, Keeper in 2025, and the pottery-themed multiplayer party game Kiln, which launched in April.