Double Fine founder and CEO Tim Schafer has discussed the union petition filed at the Psychonauts studio in May, its withdrawal roughly two weeks later, and the difficult questions it raised about leadership, workplace culture and layoffs.
The interview followed reporting based on conversations with 15 current and former Double Fine employees. The Communications Workers of America provided a statement for that reporting, while Microsoft/Xbox declined to comment. Schafer spoke for almost an hour about what he knew, what he did not know, and how he understood his responsibilities as studio head.
His comments offer a detailed account of a short but disruptive period at a studio known for its close-knit, founder-led structure. They also reveal how uncertain communication around managerial eligibility and labour-law restrictions affected everyday interactions.
When Schafer learned about the organising effort
Schafer said union activism had existed at Double Fine for years, with employees openly discussing it in the company’s internal Slack. He became certain that a formal effort was under way when a letter carrying about 30 signatures was posted.
His understanding was that managers had to avoid interfering with eligible employees’ discussions. Schafer said Double Fine acknowledged the petition, stepped back and left eligible staff to determine the details among themselves. The petition was later withdrawn, after which other major changes and concerns followed.
Microsoft directed the studio towards its labour policies and offered access to resources, including lawyers familiar with the CWA. Schafer described the company’s guidance as a broad instruction not to interfere rather than evidence that Microsoft was directly running the organising effort.
He said he was not aware of a general neutrality agreement covering Double Fine at the time. He understood that arrangements could differ between Microsoft subsidiaries and that some agreements had expired or were being negotiated. He also acknowledged that his understanding of the legal distinctions was limited.
Unclear eligibility created confusion
A major complication was deciding which employees were legally eligible to participate. Schafer said the list was being negotiated between Microsoft and the CWA but was never finalised during the two-week period.
Double Fine’s structure made the question especially difficult. Staff could lead a project, return to programming or take temporary responsibility during the studio’s two-week Amnesia Fortnight projects, while titles and salaries did not necessarily change with those duties. Schafer said he was not responsible for determining eligibility and still did not fully understand the criteria.
Managers were repeatedly told to avoid discussing union matters with eligible employees, particularly in private conversations where the discussion could become legally complicated. Schafer said the rules were strict but that many people did not know whether they were covered by them. Some employees became uncertain about ordinary one-on-ones, even though work-related conversations remained permitted.
He recalled being warned to avoid even appearing upset around staff, although he would not identify who delivered that advice. The result, he said, was an atmosphere of fear, caution and incomplete information, with both the union side and Microsoft keeping details closely controlled.
A statement, an FAQ and heated internal debate
At a regular Monday meeting after the petition appeared, Schafer read a statement prepared partly with Microsoft’s input. He said its central message was that Double Fine would remain the same company regardless of the outcome, while acknowledging that he became emotional because the situation felt heavy and unfamiliar.
An official union FAQ was then circulated. Schafer said Microsoft prepared it as part of its labour-policy process and gave the studio a plan to follow because management did not know how to respond.
Internal Slack discussions became passionate. Schafer could read conversations in general company channels, but said he was not included in any private channel reserved for eligible employees. A public discussion channel was open to everyone, and much of the debate also occurred in the general chat.
He said he saw strong feelings on both sides but did not witness name-calling. When asked about accusations that organisers were damaging trust, creating an unsafe workplace or tearing the company apart, he said he had not been part of enough of those conversations to assess them. He also noted that employees had limited ability to use HR for union-specific concerns, making the correct route for heated disagreements unclear.
Schafer’s position on unions
Schafer described himself as broadly pro-union. He argued that the games industry’s history of crunch, burnout and layoffs had created understandable demand for stronger protections, and said the petition’s stated aims did not seem unreasonable.
He speculated that employees may have been seeking protection from a larger corporate owner rather than organising specifically against him, while stressing that this was only his interpretation. He also said his earlier public comments about unions were intended to normalise discussion, although the legal restrictions surrounding the Double Fine effort meant he could not openly participate in the conversation.
His view had also become more qualified. Schafer said unions do not all operate in the same way and that some are more effective than others. He believed any successful organising effort in a creative workplace would need to account for employees’ personal investment in their work, their relationships with colleagues and the unusual structure of game development.
The studio’s culture and the legacy of the “Bad Meeting”
The interview returned to a 2019 all-company meeting that employees later referred to as the “Bad Meeting”. Schafer said he regretted raising a complicated production concern in a large forum, where a discussion about possible crunch became emotionally charged.
He said Double Fine had spent years trying to avoid a repeat of the severe crunch associated with the first Psychonauts. His intention was to explain that the studio would seek more time and funding rather than rely on crunch, but he accepted that the meeting did not communicate that effectively and that he became defensive.
Schafer rejected the idea that the meeting was simply an entire room attacking one employee, saying it was an open and passionate discussion in which the employee also received support. He nevertheless accepted that Double Fine was conflict-avoidant and needed to improve how it handled difficult conversations, performance feedback and concerns raised by less senior staff.
He described the studio as generally kind, collaborative and unusually open, with staff able to challenge management in all-hands meetings and Slack. At the same time, he said the union episode showed him that not everyone felt part of the same inner circle. His stated responsibility was to reach people in that “outer ring” and make them feel included.
Microsoft, Xbox uncertainty and the studio’s restructuring
Schafer said wider uncertainty at Xbox affected the background mood but was separate from the union question. He had initially felt cautiously optimistic when Asha took over because Matt Booty remained in charge, but later comments about studios needing to fit Xbox’s goals made him tell staff to prepare for the worst.
He said employees were also worried about compulsory AI adoption, although he had not experienced Microsoft forcing Double Fine to use AI. He regarded AI as a concern shared by many workers and unions, but not the cause of the petition.
After Double Fine separated from Microsoft, the studio set its own severance arrangements after negotiating runway funding. Schafer said the goal was to match or exceed Microsoft’s severance rather than leave workers with an incentive to prefer the company’s closure. He called the resulting package generous for an independent studio and said the layoffs were the most painful event the company had faced.
He would not disclose the exact runway or deal terms. Instead, he described a series of scenarios based on how many games the studio could sign, how many months of funding remained and what the smallest viable teams would look like. That calculation determined how many employees could be retained.
Schafer denied that union activity influenced the layoffs. Eight people who signed the withdrawal note were later made redundant, but he said the studio did not target organisers or retaliate against union supporters. He noted that the original letter had about 30 signatures, with roughly half of those people remaining at the studio and roughly half leaving.
He said decisions considered which workers were essential to the games Double Fine hoped to sign, seniority and whether employees were local and able to work from the office. The studio had allowed remote and international arrangements during the pandemic, but Schafer later decided not to add more remote employees or allow further moves away, arguing that Double Fine’s collaborative development process worked better in person and that remote support was expensive for HR and IT.
Ownership, publishing and decision-making
Schafer confirmed that the re-established Double Fine owns the publishing rights to Psychonauts 2, Kiln and Keeper, while declining to discuss royalty arrangements because they are covered by a non-disclosure agreement.
He said the new company was still transitioning towards a future equity structure. Employees held stock in the previous company and received money when the new arrangements were signed, with a fairer system to be considered once the studio was more stable.
Schafer said he ultimately has hiring and firing authority, although hiring normally goes through a committee whose decisions he has not overruled. Performance-related dismissals involve managers, reviews and multiple people. Layoffs require HR, finance and development to assess legal obligations, employee support, project needs and the studio’s remaining funds.
He also said an open-door policy does not automatically make it easy for every employee to approach the founder. His response was that leadership must reach out, particularly to newer workers and anyone who feels excluded. He organises lunch and evening board-game sessions to meet staff, but acknowledged that personal access and informal relationships can create their own power dynamics.
What Schafer would change
Asked whether he would handle the two-week union period differently, Schafer said much of his conduct was constrained by labour-law guidance and the advice he received. In his view, the more meaningful opportunity for change would have come earlier, by ensuring that people outside the studio’s established inner group felt heard and supported.
He said Double Fine had acted as well as it could while keeping the company alive and retaining a group of employees who remained happy there, but accepted that the studio was not perfect and that some former workers had poor experiences.
The interview was lightly edited for clarity, with some questions and answers removed because their subjects were not included in the wider report. The accompanying video is available through the People Make Games report.
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