Double Fine Productions, the studio behind the Psychonauts series, has announced the departure of 23 staff members. This decision follows the studio's recent spin-off from Xbox as part of a larger restructuring by the publisher. While Double Fine avoided closure, the move to independence necessitated workforce reductions to ensure the studio's sustainability.
In a statement shared on social media, Double Fine founder and head Tim Schafer described the layoffs as a difficult but necessary action for the studio's survival. "As a small, tightly-knit team, these actions are not taken lightly," Schafer wrote. "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." The studio confirmed it is providing support to affected staff during their transition.
Double Fine was granted independence from Xbox earlier this month, a move that also saw Compulsion Games, developer of South of Midnight, become an independent entity. Both studios retained their intellectual property and game catalogs as part of these agreements. Xbox's restructuring also involved the sale of Ninja Theory and Undead Labs to undisclosed buyers, while Arkane Studios is currently undergoing mandatory consultation in France.
Double Fine's most recent release is the multiplayer party game Kiln, which launched in April. During its tenure under Xbox's ownership, the studio released Psychonauts 2 in 2021 and Keeper in 2025.