The indie game company is downsizing as it parts ways with Xbox.

The ripple effect of the Xbox's layoffs has claimed more members of the game industry. Despite the a recent effort to unionize and a plan to spin out from under the Microsoft umbrella, indie game studio Double Fine has laid off some workers. Following an initial report by Kotaku, the company announced on Bluesky that 23 of its roughly 90 employees are being let go. According to the missive from Double Fine's Tim Schafer, "Only the survival of our studio would ever make us consider such a painful action."

— Double Fine (@doublefine.com) 2026-07-28T19:01:18.106Z

The team has made a wide range of well-regarded and charming games over the years, such as Psychonauts, Psychonauts 2, Grim Fandango and Costume Quest. Double Fine has been prolific lately, releasing a meditative platformer called Keeper in 2025 and multiplayer pottery brawler Kiln earlier in 2026. Despite these recent well-received projects, Double Fine was rumored to be included in the newest round of job cuts numbering in the thousands that began at Xbox and Microsoft this summer. The studio announced on July 6 that it would once more be going independent, ending a chapter that began when it joined Xbox Game Studios in 2019. It's not the only company to face difficult choices as a result of the Microsoft and Xbox bloodbath, and unfortunately, it isn't likely to be the last.