Psychonauts and Keeper developer Double Fine Productions, and South of Midnight and We Happy Few developer Compulsion Games, have reacted to their new futures as it's confirmed they will become independent developers again.

Both studios were let go by Microsoft during unprecedented Xbox restructuring announced this afternoon, which will see an approximately 20 percent reduction in staff, equating to 3200 job losses across the company.

It's a move that will also see Hellblade developer Ninja Theory and State of Decay developer Undead Labs under as yet undisclosed new ownership. Celebrated Dishonored and Deathloop developer Arkane Lyon is negotiating a future away from Xbox, too. Zenimax and Bethesda will also alter their focus to double down on proven IP, such as The Elder Scrolls and Fallout.

Crucially, Double Fine and Compulsion leave Xbox while retaining ownership of the games they created there, including South of Midnight for Compulsion, and presumably Psychonauts 2 and Keeper for Double Fine - the studio didn't specify.

To see this content please enable targeting cookies. Manage cookie settings Double Fine's wonderful Keeper.Watch on YouTube

Said Double Fine in a statement: "Once again, Double Fine Productions will be an independent studio. We're thankful to everyone at Xbox for seven great years together, and for working with us to reach an outcome which preserves our history and culture, and returns ownership of our games to us.

"To everyone who has reached out to us these past few weeks: Thank you so much for all your kind words, we've been deeply touched by all your messages. We will share more news soon on what comes next."

Said Compulsion Games in a statement: "Today, we're sharing that Compulsion Games will return to independent management following our time as part of Xbox. As part of this transition, we will retain the rights to Contrast, We Happy Few, and our award-winning South of Midnight.

"We're grateful for the years we spent with Xbox, for the support they provided our team, and for the opportunity to bring these games to players around the world. As an independent studio, we're excited to continue building the distinctive games that define Compulsion while taking the next steps in our journey."

Neither Ninja Theory, Undead Labs, or Arkane Studios have responded publicly to today's news. Their situations are, however, slightly different - they presumably have to wait for sign-off on whatever they say.

South of Midnight - Official PS5 Launch Trailer Compulsion's incredibly stylish and musical South of Midnight.Watch on YouTube

Compulsion and Double Fine joined Xbox during a Microsoft spending spree in summer 2018 - the same "aggressive" expansion Xbox leader Asha Sharma referenced today during the Xbox restructuring email. "It is neither possible nor desirable to own every great independent studio," Sharma said. "We have also learned that we are not the best home for every type of studio; in a typical year, we lost 64 cents for every dollar we invested."

Double Fine released Psychonauts 2 and Keeper during its time at Microsoft, and the smaller pottery game Kiln. We Recommended Psychonauts 2 in our review back when we awarded badges, and we dished out a glittering five stars in our Keeper review more recently. South of Midnight was a more mixed bag, flaunting incredible artistic style and interwoven music, but displaying less imagination in its action mechanics. We awarded three stars in our South of Midnight review.

Compulsion Games was independent for nine years before Microsoft swooped in, presumably attracted by the eye-catching We Happy Few. Double Fine was staunchly independent for 18 years, meanwhile. Even under Microsoft, Double Fine retained that independent mindset, maintaining and championing the indie-focused Day of the Devs showcase and initiative.

It'll be interesting to see what this means for all of the studios going forwards. Double Fine and Compulsion in particular don't have the financial backup of a larger owner now, but they also aren't at risk of organisation-wide restructuring like today's, either. They fend for themselves.

There's also a chance that as independent studios, fanbases may get more strongly behind them, as they're no longer connected to a company with worrying ties to Israel's military, to generative AI, and to business decisions that leave thousands of people jobless. But can they survive alone? We shall see.