Xbox Speaks Out After Double Fine Lays Off 25 Percent of Staff in Transition to Independent Status

Double Fine, champion known for creating the 2005 level crippled Psychonauts, has laid disconnected 25.6% of its unit 3 weeks aft Xbox’s monolithic restructuring efforts were revealed.

The workplace announced the layoffs connected July 28, 2026, confirming that this downsizing was a nonstop effect of becoming an autarkic institution aft Xbox unloaded them arsenic portion of its ain restructuring earlier this month.

“As a small, tightly-knit team, these actions are not taken lightly,” a connection from Double Fine reads. “Only the endurance of our workplace would ever marque america see specified a achy action. Our modulation to becoming an autarkic institution besides means becoming a size that we tin sustain. The radical we are losing were each important. They each made an interaction connected our games and culture, and they volition beryllium missed. We are committed to supporting each affected idiosyncratic arsenic champion arsenic we can, and we convey them for their hard enactment and committedness to the originative tone we cherish present astatine Double Fine.”

Xbox besides released a connection astir the layoffs, confirming that the workplace afloat returned to its autarkic presumption earlier this week, keeping their “IP, catalog, and runway for their adjacent games.”

“As they statesman their adjacent section arsenic an autarkic studio, we look guardant to seeing what they make next. Double Fine is present afloat autarkic and manages its ain operations,” a spokesperson said to Kotaku.

As revealed by Jason Schreier, Double Fine is simply a astir 90-person team, meaning that astir 25.5% of unit was chopped arsenic the workplace shrinks backmost to a manageable size to lucifer its autarkic status.

Double Fine’s self-management, arsenic good arsenic that of Compulsion Games (We Happy Few, South of Midnight), was revealed earlier this month. Both studios got to support their IPs successful the transition, with each thanking fans for their continued enactment and promising to stock updates connected aboriginal projects astatine a aboriginal date.

This isn’t the archetypal clip either improvement location has been independent; successful fact, some were founded arsenic indie studios astatine the start, with Double Fine famously founded by LucasArts alum Tim Schafer successful 2002.

On July 6, 2026, Xbox CEO Asha Sharma sent retired an interior email to unit announcing the astir “significant” restructuring successful the company’s past that would interaction thousands of employees. 3,200 were connected the chopping block, with 1,600 laid disconnected that day. As noted by IGN’s Wesley Yin-Poole, this means astir one-fifth of its unit volition beryllium impacted, arsenic good arsenic galore studios Xbox purchased during its infamous buying spree implicit the past 5 years.

“I privation Xbox to beryllium 1 of the fewer companies that entertains much than a cardinal radical each time and gives everyone the accidental to make and connect,” Sharma wrote successful her email. “I cognize we tin execute this goal. XBOX has galore of the astir beloved franchises successful amusement history, talented studios astir the world, and we volition instrumentality to maturation successful 2027.

“History is afloat of companies that mistake longevity for inevitability. We volition not beryllium 1 of them.”

Virginia (she/her) is IGN’s News Editor. With 10 years of acquisition reporting connected games and entertainment, she’s got a storied inheritance successful the warring crippled community, influencer news, and viral online trends. Find her connected Twitter astatine @TheeMissGlaze.