The independent games company is reducing its workforce by splitting from Xbox.
The ripple effect of layoffs at Xbox cost the gaming industry more members. Despite recent unionization efforts and a proposed split under the Microsoft umbrella, independent game studio Double Fine has laid off some workers. Following a first report from Kotakuthe company announced on Bluesky that 23 of its approximately 90 employees were being laid off. According to the missive from Double Fine’s Tim Schafer, “Only the survival of our studio could make us consider such painful action.”
– Double Fine (@doublefine.com) 2026-07-28T19:01:18.106Z
The team has created a wide range of beloved and charming games over the years, such as Psychonauts, Psychonauts 2, Sinister Fandango And Costume Quest. Double Fine has been prolific of late, releasing a meditative platformer called Guardian in 2025 and multiplayer pottery brawler Oven earlier in 2026. Despite these recent well-received plans, Double Fine was reportedly included in the latest round of job cuts numbering in the thousands that began at Xbox and Microsoft this summer. The studio announced on July 6 that it would become independent again, ending a chapter that began when it joined Xbox Game Studios in 2019. It’s not the only company facing difficult choices in the wake of the bloodbath between Microsoft and Xbox, and unfortunately, it likely won’t be the last.
