Double Fine cuts 23 jobs after regaining independence from Microsoft

Game studio Double Fine, known for the Psychonauts series, announced on 28 July 2026 that it had laid off 23 employees, roughly a quarter of its workforce. Founder and studio head Tim Schafer posted the news on Bluesky, saying the cuts were necessary for the studio’s survival now that it is fully independent.

The studio, which had about 90 staff members before the layoffs, will continue with roughly 67 employees. Double Fine had been acquired by Microsoft in 2019 for $13.2 million, but the partnership ended during a large Xbox restructuring that saw 3,200 jobs cut across the division, including 1,600 on 6 July 2026. While Microsoft allowed Double Fine to keep its IP rights, the studio must now fund its own operations without the parent company’s financial support.

Schafer emphasized that the move, though painful, is aimed at building a sustainable cost structure for the independent studio.