Tim Schafer, founder of Double Fine and creative lead behind titles like Psychonauts, has spoken candidly about the studio's experience being divested by Xbox earlier this year. In an interview with Bloomberg's Jason Schreier, Schafer detailed the difficult negotiations and internal struggles that followed Microsoft's significant restructuring efforts.

Schafer acknowledged that he had a sense of impending changes at Xbox before the divestment was announced. "You’re like, 'Wait a second, we’re not going out like this,'" he stated. "Some people said, 'I’m checking out, this is one too many battles for me.’ But for the rest of us, it’s like a creative awakening."

He expressed a determination to keep the studio independent, stating, "No one puts Double Fine out of business except for me." Despite the challenges, Double Fine managed to retain its intellectual properties and regain full independence. However, this transition did necessitate laying off a quarter of its staff.

Despite the hardships, which Schafer described as "soul-sucking stuff. Inner conflict, threats of extermination, long negotiations, strenuous hard tradeoffs with lawyers. Tons of demoralizing stuff," he also highlighted a renewed creative energy within the remaining team. "This is the good fight. Can we think of a great idea for a game that we can actually do for the right budget, that can get to this publisher who’s interested in these types of games? This kind of problem-solving is soul-enriching. Using creativity to solve problems is what gets us up in the morning."

This period of change at Xbox, under CEO Asha Sharma, has seen significant layoffs affecting approximately 3,200 employees as the company works to improve profitability. Sharma has also been open about the company's future, mentioning a "family of devices" for the next-generation console, codenamed Project Helix.

In a separate development, Double Fine has now released Keeper, a title that was previously exclusive to Xbox, on PlayStation 5. This move was enabled by the studio's regained independence from Microsoft.