After The Xbox Layoffs, This Documentary Is Required Viewing

Welcome back to Remastered! Unfortunately, a rough month for the video game industry continued this week. In response, I’m recommending a documentary that both shows off something Xbox no longer values and highlights the care and humanity that goes into the creation of art. Consider subscribing to Remastered for free if you like what you read. 

PsychOdyssey Is The Most Important Video Game Documentary Ever Made

On July 6, Xbox announced plans to lay off 3,200 employees over the next year. 1,600 have already taken place this week, with studios like Obsidian Entertainment, Bethesda Game Studios, and id Software losing a significant number of developers. Additionally, Xbox is divesting its ownership of Arkane Studios, Compulsion Games, Double Fine, Ninja Theory, and Undead Labs. It’s one of the most monumental and devastating rounds of layoffs in modern video game history.

Each affected studio, and the art created by their talented developers, have left an impact on me, yet Microsoft no longer sees that same value. The multi-trillion-dollar company is leaving behind shells of development teams at lauded studios to work on major IP. Xbox got into this situation in the first place due to poor management, and it’s continuing to mishandle its story as it tries to find a way out of its slump.

Ultimately, the whims and desires of the corporate leadership running Xbox don’t really matter; the individual impacted lives of the game developers laid off or still working at the dispelled studios do. During this time of strife for Xbox, I’m drawn back to a documentary previously released by one of the newly independent studios: Double Fine’s PsychOdyssey. 

PsychOdyssey not only retroactively shows the warning signs that accompanied Xbox’s acquisition, but is also a wonderful documentary that demonstrates the personal passion and struggles that go into creating fantastic art. After watching it, you’ll be disgusted that Xbox doesn't see the value in studios like Double Fine, which is now independent again, and you’ll better understand why sustainable careers for game developers are worth fighting for.

Throughout Psychonauts 2’s development (2014-2021), a documentary was constantly present at Double Fine. Over that time, the documentary crew captured a studio that struggled to bring the game together as a production intended to only last a few years became a seven-year odyssey. Although I should note that the documentarians are now employees of Double Fine and the documentary was released when the studio was a subsidiary of Xbox, PsychOdyssey is still an incredibly honest look at the game’s development. It's completely free to watch on YouTube as well.

PsychOdyssey an engaging documentary thanks to its most dramatic moments, like a tense meeting about the studio potentially having to crunch, or the COVID-19 pandemic throwing a wrench into development plans. But what it’s truly effective at is showing the humanity behind the wonderful games we play. 

Seeing a relatively inexperienced game designer take on the challenge of creating whole worlds by himself over several years, or one of the documentarians finding a love for game development during a game jam, are some of the moments that stick with me years after initially watching the documentary. PsychOdyssey is not a Tim Schafer puff piece, and does a fantastic job at showing how every game developer at a studio has their own lives, stories, and roles to play in the creation of technologically complex art.

PsychOdyssey might only follow the development of a handful of games at Double Fine, but watching it will make you understand why every layoff is devastating, and why studios being snatched up and then tossed away by Microsoft is so excruciating.

You also get some insight into Xbox’s acquisition of Double Fine, which will help you understand how much they failed to fulfill their promises to studios like Double Fine during and after the acquisition process. If you watch nothing else, I recommend checking out Episode 27, titled Villains of Crunch Mode.

That episode is not only packed with many of the stressful moments I’ve referenced above, but it's also when Xbox’s Matt Booty visits the studio and sells the idea that Xbox wants to “change as absolutely little about this studio as possible.” In 2026, Xbox’s official messaging is that it is not “desirable to own every great independent studio” like Double Fine, a far cry from everything that Booty, who is still with Xbox today, said during that meeting. 

When you see mergers, acquisitions, layoffs, or studio spinoffs similar to what happened at Xbox over the last week, it can be easy to become an armchair executive and mull over whether the Double Fine acquisition made sense in the first place. Rewatching some of PsychOdyssey reminds me that that doesn’t really matter. The fact is that Microsoft made promises it couldn’t keep, and now the livelihoods and futures of several studios and the developers who work at them are affected. 

PsychOdyssey will stand the test of time as the best video game documentary ever made. It’s a vital piece of game history, showing not just the struggles that an independent studio can face during a lengthy and tumultuous development, but also what it was like to become a cog in the Xbox acquisition machine as it was underway. 

Right now, we all need to recognize that the biggest video game companies do not value the humanity and creativity that made us fall in love with the medium in the first place. PsychOdyssey will help you understand why that is the case, and how much needs to change for the video game medium to reach a better place for the developers who make the games we love. 

What's Old Is News

The fallout of Xbox's layoffs, Nintendo Switch Online additions, and more

• The Xbox news was also reported by outlets such as Game File and Bloomberg. They revealed several shortcomings of Phil Spencer’s era at Xbox, and what Microsoft wants to do with the brand in the future:
  • Xbox was spending over $1 billion a year on Game Pass content, yet subscriptions had stalled for years. This won’t completely stop, contrary to some current speculation.
  • Undead Labs and Ninja Theory’s new owners won’t be revealed until later in the year.
  • Minecraft was basically funding the rest of Xbox’s catalog, and now Sharma and co. plan to primarily invest in it.
  • Obsidian has canceled a sequel to Avowed and is now working on a new Fallout game. 
• Kevin LaChapelle, who played a pivotal role in creating backward compatibility support for Xbox One, was laid off by Microsoft, among countless other talented developers.
• Assassin’s Creed: Black Flag Resynced launches today and has garnered positive reviews. 
• Orpheus: To Hell and Back, originally made for the Game Boy by indie developers, is coming to Steam on July 13.
• Hamster Corporation is releasing Hyper Crash and Rhapsody: A Musical Adventure through Arcade Archives and Console Archives, respectively. 
• VGC reports that Project Phoenix, an infamous MIA Kickstarter game that was a throwback to classic JRPGs, is back in development. VGC spoke to the developer leading the project, who now claims the game will be out by 2031.
• HyperMega Tech announced the Super Pocket Activision Edition, a small handheld console preloaded with classic Activision games like Pitfall. It will cost $69 and launch in September.
• Nintendo brought the GBA title Dr. Mario & Puzzle League, as well as Fortified Zone, The Sword of Hope 2, and Wario Land: Super Mario Land 3 for Game Boy, to Nintendo Switch Online’s classics catalog. 
• The Tony Hawk’s Pro Skater 1+2 remake from 2020 is coming to Xbox Game Pass on July 21. 

For both PlayStation and Xbox, this has been a pretty depressing month, so I turned to two Nintendo games this past week for my enjoyment.

Rhythm Heaven Groove: I enjoyed the demo enough to pick up the full game. Yes, I still suck at rhythm games and have only gotten an “amazing” rating on a single level. At the same time, I absolutely adore how charming this game is, and I really liked the bit of rhythm RPG Beatspell that I’ve been able to play. I know this will always be a game I can whip out for quick hits of fun when I feel the need in the months to come.

Yoshi and the Mysterious Book: Good-Feel’s latest 2D platformer is definitely very casual and kid-friendly, but I’m really enjoying it. It’s essentially Yoshi’s Island meets Bugsnax, as you survey creatures across different levels, naming them and earning points by learning their various habits. While I would’ve preferred larger, sandbox-like levels to many smaller, enemy-specific ones, this game’s aesthetics and emphasis on discovery over all else made it a relaxing and cheerful game to play during a terrible week for the industry. 

That's all for Remastered this week. Hopefully, I'll be back next with a newsletter that's a little less dour in tone. Subscribe so you don't miss that, and consider tipping me on Ko-fi if you'd like to support independent games media.