The creators of Psychonauts are laying off a quarter of their staff. It's the result of their split from Xbox.

Calendar 7/29/2026

This article is an English translation of our original Polish review. Read the original on Wybierz.tv.

Double Fine Productions is starting a new chapter in its operations, but it was not without difficult decisions. The studio, best known for the Psychonauts series and the recently released game Kiln, announced a reduction in staff. The redundancies came shortly after the studio regained independence from Xbox. The company emphasises that the decision was driven solely by financial considerations. Microsoft confirmed the end of the partnership and that the studio had been granted full independence. However, the future of new projects remains uncertain.

Double Fine reduces team after regaining independence

Double Fine Productions announced on Bluesky that it has made 23 redundancies. That represents a reduction of around one quarter of its workforce. The studio said the decision was not easy and was taken solely to allow the company to continue operating. According to the published statement, the move to an independent studio requires scaling the business to match its new financial realities. Representatives of Double Fine emphasised that all those made redundant had made a significant contribution to the studio and its working culture. The company also pledged support for the employees affected by the cuts. At the same time it stressed this was a necessary decision to ensure the studio’s continued existence. This is one of the first consequences of regaining full independence after ending its partnership with Xbox. For many fans it is surprising news, especially as the studio recently released a new game. The redundancies nonetheless highlight the financial challenges even well‑regarded developers face. So far no details of further organisational changes have been announced. The studio says it intends to continue operating as an independent developer.

Microsoft confirms split, and the future of new games remains unknown

In a comment provided to Kotaku, Microsoft confirmed that Double Fine has officially returned to independent management. The company retained its brands, games catalogue and funds for the development of future projects. Xbox wished the studio well and expressed interest in its future productions. At the same time, it did not disclose which games Double Fine is currently working on. The lack of such information makes it hard to assess the impact of the layoffs on the schedule of forthcoming releases. It is possible, however, that the staff reductions will lead to delays in ongoing projects. For now these are only assumptions, as the studio has not provided any details. Double Fine has long been acclaimed for its original and creative titles, so many players will watch its future closely. Returning to independence gives the studio greater creative freedom, but also means it must finance its operations itself. The coming months will show whether the company can find its feet in the new reality. At the moment the priority remains stabilisation after the completed restructuring.

Double Fine Productions is launching as an independent studio, but its first step was a reduction in staff affecting around 25 per cent of employees. The creators emphasise that the decision was necessary to ensure the company's financial stability and continued operation.

source: techpowerup

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