Three Weeks After Xbox Let It Go, Double Fine Laid Off 23 People

Double Fine has laid off 23 people. The studio announced it in a statement on Bluesky yesterday, three weeks after Microsoft spun it out of Xbox and set it loose as an independent company. Bloomberg’s Jason Schreier put the studio at around 90 employees before the cuts, which makes this better than a quarter of the place.

“Only the survival of our studio would ever make us consider such a painful action,” Tim Schafer said. The studio’s statement put the arithmetic plainly: “Our transition to becoming an independent company means becoming a size that we can sustain. The people we are losing were all important. They all made an impact on our games and culture, and they will be missed.”

Three weeks. That is the part to sit with.

When Microsoft announced its restructure on July 6, cutting around 3,200 jobs across the gaming division, Double Fine and Compulsion Games were the good news in it. They were not closed, the way Ninja Theory was reported to be. They were released, with their IP and their catalogues, and Xbox CEO Asha Sharma said so directly. I wrote at the time that they returned to independence with their IP, catalogue and teams. The first two held up. The third one is what a quarter of a studio just found out about.

Double Fine was not even the first sign. Compulsion Games, the other studio cut loose in the same announcement, put the word out that it needed work about a week after the split.

Let me be fair about what this is, because the easy version of this story is wrong in both directions. Microsoft did not do this. Microsoft did the thing everybody asked for: it let a studio go rather than shutting it down, and it let it keep the things that make a studio worth something. Double Fine also has real history here that has nothing to do with Xbox. It spent most of two decades struggling to fund its own projects, which is a large part of why it sold to Microsoft in 2019 in the first place. Its last two games, Keeper in 2025 and Kiln earlier this year, were the kind of thing the studio is loved for and neither one lit up a sales chart.

But that is exactly the point, and it cuts the other way too. Everyone knew what Double Fine’s economics looked like, because Double Fine had already lived them once. So when the restructure was announced and independence was offered as the merciful outcome, the merciful outcome was handing a studio back the same problem it had sold itself to escape. Three weeks was how long that took to show up in a headcount.

So, the studio that keeps a chunk of the adventure game canon alive and on sale just cut a quarter of itself to stay open, three weeks after being told it was free. The games survive. That was the deal, and the deal was honored. It is the people who make more of them that the industry keeps deciding it cannot afford.