Double Fine Productions has laid off 23 developers following its recent separation from Xbox Game Studios. The studio, known for titles such as Psychonauts 2 and Keeper, is restructuring to become a sustainable independent company.
In a statement shared on the studio's Bluesky account, Double Fine founder Tim Schafer described the decision as painful but necessary for the studio's survival. "As a small, tightly-knit team, these actions are not taken lightly," Schafer said. "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."
He emphasized the impact of the departing employees, stating, "The people we are losing are all important. They all made an impact on our games and culture, and they will be missed." The studio has committed to supporting each affected individual to the best of its ability.
The layoffs come after a significant restructuring at Xbox, which led to Double Fine regaining its independence earlier this month. This move affected thousands of developers across multiple game studios. At the time of the layoffs, Double Fine reportedly employed around 90 people.
Double Fine, originally founded in 2000 by Schafer and former LucasArts staff, established a reputation for unique titles, beginning with the 2005 release of Psychonauts. Subsequent games like Brutal Legend, Stacking, and Broken Age further solidified its standing as a creative independent developer.
The studio was acquired by Xbox in 2019 during the development of Psychonauts 2. The game received critical acclaim and a Game of the Year nomination. More recently, the studio released Kiln, a multiplayer pottery game, which did not achieve significant traction. Xbox's new CEO, Asha Sharma, announced earlier this year that Xbox would be parting ways with Double Fine, Compulsion Games, Ninja Theory, and Undead Labs, stating it was "neither possible nor desirable to own every great independent studio."
Double Fine is the first of the four studios to publicly announce developer layoffs since their respective splits from Xbox, occurring at a challenging time for the video game industry, particularly for mid-sized studios.