Double Fine Cuts 23 Staff Weeks After Xbox Divestment, Schafer Confirms
Double Fine Productions has laid off 23 members of its staff, studio founder Tim Schafer confirmed in a statement posted to social media on July 28, just weeks after the Psychonauts developer was spun back out into independence from Xbox. The cuts land on a team that reportedly numbered around 90 people, meaning the studio has lost roughly a quarter of its workforce in one day.
Schafer’s Statement on the 23 Departures
Less than one month after Xbox spun off Double Fine Productions as an independent studio, the developer has laid off 23 employees, a move it says was necessary to ensure “the survival of our studio.” The announcement came directly from Schafer, who has led the studio since founding it, and was shared on the company’s Bluesky account rather than through a traditional press release.
In the statement, Double Fine said “Today, Double Fine Productions let go of 23 members of its staff. 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 means becoming a size that we can sustain.” The studio added that the people affected “were all important. They all made an impact on our games and culture, and they will be missed.”
Among those confirmed to have lost their jobs is Ben Johnson, a game designer on Kiln who posted about the layoffs on Bluesky just ahead of the news being publicly reported. Double Fine has not detailed which departments or roles were most affected.
A Roughly 90-Person Studio Loses a Quarter of Its Staff
Double Fine has not published an exact headcount, but Bloomberg’s Jason Schreier reported the studio employed “around 90 people” before the layoffs, meaning roughly a quarter of the studio is now gone. That scale of cut is severe for a developer of Double Fine’s size, which has built a cult following over more than two decades on quirky, narrative-driven titles.
Founded in 2000, Double Fine has existed for over two decades, initially founded by Tim Schafer and other ex-LucasArts developers. Its most recent release under Xbox was the pottery-themed multiplayer party game Kiln, which launched in April, following Psychonauts 2 in 2021 and Keeper in 2025.
Xbox’s Restructuring Set the Split in Motion
Double Fine’s independence was not its own choice but part of a sweeping Xbox restructuring announced earlier in July. Double Fine Productions was among the five studios spun off from Xbox as part of its ongoing restructuring, and while it avoided closure, the divorce has forced the team to make cuts. As part of that split, Double Fine was granted independence from Xbox alongside South of Midnight developer Compulsion Games earlier in the month; both studios retained their IP and game catalogs as part of the split.
Not every studio caught in the shake-up landed the same way. Xbox also spun off three other studios; Ninja Theory and Undead Labs were sold to unspecified buyers, and Arkane Studios’ fate remains up in the air as it undergoes mandatory consultation in France. The broader Xbox restructuring is far larger in scope than the Double Fine cuts alone. Within Xbox, 1,600 individuals were laid off one month ago, with another 1,600 layoffs planned throughout the coming year.
Why Independence Didn’t Mean Safety
Studios cut loose from a major publisher typically lose access to that publisher’s marketing budgets, distribution muscle and, often, day-to-day financial cushioning — while suddenly carrying full responsibility for their own overhead. Double Fine’s statement makes that trade-off explicit, framing the cuts as a matter of survival rather than a project cancellation or a response to poor sales.
For the wider industry, the episode underlines a pattern seen repeatedly since major publishers began shedding first-party studios in 2026: “independence” following a corporate divestment frequently arrives bundled with downsizing, as former subsidiaries right-size their headcount to what they can fund without a parent company’s balance sheet behind them.
Double Fine has not said whether any announced or in-development projects are affected by the cuts, and the studio has not disclosed its current total headcount following the layoffs.
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