Double Fine Lays Off 23 Staff After Microsoft Separation; Xbox Revenue Falls $1.7B in FY2026

NewsData.io · United States · Jul 31, 2026

Double Fine Productions has laid off 23 employees following its separation from Microsoft's Xbox division, with studio head Tim Schafer citing the need to reach a sustainable size as an independent studio. The cuts come weeks after Microsoft announced plans to eliminate 3,200 roles across its gaming division. Separately, Xbox reported a 7% revenue decline — roughly $1.7 billion — in fiscal year 2026, driven by falling console sales and declining content and services revenue. The broader gaming sector continues to see mass layoffs, with industry observers warning that the loss of institutional knowledge poses long-term risks to game development.