Double Fine Cuts 25% Of Staff After Separating From Microsoft

After regaining its independence from Microsoft, the veteran, esteemed game developer Double Fine has enacted a sweeping round of layoffs.

Studio head Tim Schafer said the San Francisco-based studio laid off 23 people this week, which, according to reporter Jason Schreier, amounted to about 25% of the developer's total headcount.

"As a small, tightly knit team, these actions are not taken lightly," Schafer said. "Only the survival of our studio would ever make us consider such a painful move."

He added that the cuts were directly related to Double Fine regaining its independence from Microsoft. Schafer said Double Fine needed to scale down to become a "size that we can sustain."

Every affected staffer will be supported "as best we can," Schafer said. "We thank them for their hard work and commitment to the creative spirit we cherish here at Double Fine."

Founded in 2000, Double Fine was an independent studio until Microsoft bought the company in 2019. Schafer told Game Informer in 2019 that he was "very concerned" about selling to Microsoft due to a fear that the company might not be able to retain its "culture and identity" under a behemoth like Microsoft. However, Schafer said he took the deal because he was under the assumption that Double Fine would be "left alone" to "do their own thing and stay independent."

Earlier this month, Microsoft announced a drastic "reset" of the Xbox business under Xbox CEO Asha Sharma, and this included Microsoft divesting of five studios, including Double Fine. As part of the separation, Microsoft said Double Fine would retain its IP, catalog, and runway for their next games."

Double Fine released three games under Xbox, including Psychonauts 2 (2021), Keeper (2025), and Kiln (2026).