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Double Fine, best known for creating the 2005 platform game Psychonauts, has laid off 25.6% of its staff three weeks after Xbox’s massive restructuring efforts were revealed.
The studio announced the layoffs on July 28, 2026, confirming that this downsizing was a direct result of becoming an independent company after Xbox unloaded them as part of its own restructuring earlier this month.
“As a small, tightly-knit team, these actions are not taken lightly,” a statement from Double Fine reads. “Only the survival of our studio would ever make us consider such a painful action. Our transition to becoming an independent company also 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. We are committed to supporting each affected person as best as we can, and we thank them for their hard work and commitment to the creative spirit we cherish here at Double Fine.”
Xbox also released a statement about the layoffs, confirming that the studio fully returned to its independent status earlier this week, keeping their “IP, catalog, and runway for their next games.”
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