Double Fine has laid off 23 staff just three weeks after Microsoft let it go independent

Double Fine, the studio behind Psychonauts 2, has laid off 23 members of its staff as it transitions back to life as an independent company after being divested by Xbox earlier this month. Studio founder Tim Schafer confirmed the cuts in a statement, describing them as a painful but necessary step for the studio's survival.

The details:

• Xbox announced the divestment of Double Fine alongside Compulsion Games as part of its sweeping July restructuring. Both studios were granted independence and allowed to keep their IP and game catalogs, with Xbox also providing runway funding for their next projects. An Xbox spokesperson told Kotaku: "Double Fine fully returned to independent management earlier this week, with their IP, catalog, and runway for their next games."
• The 23 redundancies represent roughly 25% of the studio's workforce of approximately 90. Schafer said in a statement: "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."
• Double Fine was founded in 2000 by Schafer and fellow ex-LucasArts developers, remaining independent until Microsoft acquired it in 2019. Under Xbox it released Psychonauts 2, Keeper, and Kiln, none of which were described as strong commercial performers.
• Double Fine is one of several studios now navigating an uncertain future following Xbox's restructuring. Ninja Theory and Undead Labs have reportedly been sold to undisclosed buyers, while Arkane Studios is undergoing a mandatory consultation process in France.