Double Fine Independent After Xbox Divestment, Lays Off 25%

Double Fine Productions is now a fully independent studio again after being divested by Xbox as part of its corporate restructuring. The studio, however, had to lay off a quarter of its staff to achieve this independence, founder Tim Schafer confirmed in a September 2026 interview with Bloomberg's Jason Schreier.

Tim Schafer told Schreier he sensed the divestment was coming before it was officially announced this summer. He described the team's reaction as a mix of resignation and renewed determination.

"You're like, 'Wait a second, we're not going out like this,'" Schafer explained. "Some people said, 'I'm checking out, this is one too many battles for me.' But for the rest of us, it's like a creative awakening."

Schafer's Defiant Stance

Schafer adopted a defiant tone regarding the studio's fate. "No one puts Double Fine out of business except for me," he stated. He characterized the past year as filled with demoralizing corporate struggles but said the challenge has reignited the team's creative drive.

"This is the good fight," Schafer said. "Can we think of a great idea for a game that we can actually do for the right budget, that can get to this publisher who's interested in these types of games? This kind of problem-solving is soul-enriching."

He admitted the process is hard, scary, and stressful, but concluded it has "put some fire back into the bellies of the team and me."

The Path Forward and a Kickstarter Campaign

The studio has retained ownership of its intellectual property. It has already launched a Kickstarter campaign for its next, unannounced project. Schafer added a notable stretch goal: if the campaign raises $100 million, Double Fine will also develop Brutal Legend 2.

In related news, Double Fine shadow-dropped Keeper, a game that was formerly an Xbox exclusive, on PlayStation 5. This release was possible immediately following the studio's separation from Xbox.

The Broader Xbox Restructuring

Xbox's divestment of Double Fine was part of a larger series of changes under CEO Asha Sharma, aimed at returning the company to profitability. These changes included layoffs affecting approximately 3,200 employees across the company. Sharma has discussed Xbox's financial state publicly, telling the BBC that the next-generation console, codenamed Project Helix, will be a "family of devices." She declined to confirm if it will include a disc drive.