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Double Fine hit with layoffs after exiting Xbox – “The people we are losing were all important”
Double Fine Productions, the studio behind Psychonauts 2, has laid off 23 employees following its recent exit from Xbox Game Studios. Studio head Tim Schafer said the cuts were necessary for the studio's survival as it transitions back to being an independent company, describing the move as painful but required to reach a sustainable size. The layoffs come roughly a month after Xbox announced it was cutting around 3,200 jobs across its division and parting ways with four studios, of which Double Fine was one.
According to Bloomberg's Jason Schreier, Double Fine had around 90 staff before the cuts, meaning the layoffs affect roughly a quarter of the workforce. Xbox confirmed Double Fine fully returned to independent management this week, retaining its intellectual property, back catalogue and funding runway for future games, though the exact length of that runway remains unclear. While under Xbox, the studio released Psychonauts 2, Keeper and the multiplayer game Kiln, and Schafer said the studio remains committed to supporting those affected.
In short
- Double Fine laid off 23 staff after becoming independent again
- Cuts follow Xbox's wider 3,200-job reduction and studio closures
- Studio kept its IP and catalogue but funding runway is unclear
Steelman: both sides, in good faith
The strongest fair case each way — we don't pick a winner.
The case for
The studio faced unavoidable economic realities: without Xbox's financial support, Double Fine required a sustainable cost structure as an independent company. These difficult layoffs allowed the company to survive rather than face potential closure, whilst retaining intellectual property rights and a funded development runway. In challenging circumstances, preserving the studio's viability through necessary cost reduction is a pragmatic outcome that enables future game development.
The case against
This represents a systemic problem in the games industry where workers bear the costs of corporate consolidation decisions made by distant publishers. Microsoft's choice to exit Double Fine forced this situation; responsibility should rest with executives, not the workers losing employment. Such recurring layoff cycles demonstrate that the industry's current business model places profit and efficiency above worker stability, security and welfare.
Explained simply
Double Fine Productions is a video game development studio known for titles such as Psychonauts 2. The studio has laid off 23 employees, around a quarter of its workforce, following its recent exit from Microsoft's Xbox Game Studios.
The layoffs come after Xbox announced major job cuts across its division and discontinued partnerships with several studios, including Double Fine. Studio head Tim Schafer said the reductions were necessary for the company to operate sustainably as an independent business, whilst acknowledging the human impact of the decision.
Double Fine has retained ownership of its games, intellectual property and its existing funding following the split from Xbox. The studio continues to support games it released under Xbox's ownership, including Psychonauts 2 and the multiplayer title Kiln.
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