Windows Central Insider
According to a new report, Microsoft and Xbox are planning to close Compulsion Games, the development studio behind Xbox's 2025 first-party action-adventure title South of Midnight. It also created the 2018 stealth-driven adventure game We Happy Few.
The news comes from Kotaku, which reported earlier today that it became aware of Microsoft's intent to shutter the developer. Notably, it also comes mere days after it was reported that significant Xbox layoffs are coming in July, and after its CEO Asha Sharma admitted the brand is "over-extended" and will go through a "reset" of sorts in the next 100 days.
Also, earlier today, it was reported that Xbox Game Studios head Craig Duncan and chief of staff Louise O'Connor were stepping down, with both leaving Microsoft after long tenures at developer Rare and Xbox.
According to its LinkedIn page, Compulsion Games presently has "approximately 90 developers" working at the studio, though Kotaku reports that its workforce is larger. It's also "looking to expand with the right people," though it ultimately never will should this closure come to pass.
Just two months ago, Compulsion's talent lead Joe Palin wrote that the developer is hiring in programming, design, and art roles for "A fascinating, intriguing, brand new IP."
Around the same time, both Asha Sharma and Xbox chief content officer Matt Booty highlighted the studio's successes with South of Midnight while speaking to Game File. "The big things that we're thinking about are we want to make great games. And so, you know, Matt can talk about that. The Peabody Award for South of Midnight, Kiln coming out today. Like, I just feel like every day there's something wonderful there," Sharma said.
"Asha mentioned this, but our game South at Midnight today won a Peabody Award, which I think is such a validation of the storytelling capability of games these days," Booty added. "And that’s right on the heels of them winning a BAFTA for new IP a couple Fridays ago."
"And, that is our goal, right? I mean, we run a portfolio and our portfolio includes some of the biggest franchises on the planet—Call of Duty and Minecraft—but we’re also dedicated to places where new [intellectual property] can come to life and where these stories can be told, you know, in our studios like Compulsion and Double Fine that got some nominations for Keeper," he continued.
It's worth noting that South of Midnight reviewed well overall, with fans and critics divided on its combat gameplay but near-unanimously positive about its narrative and presentation. In our own review, we gave it a 4/5 score, writing that it "delivers a story filled with trauma and beauty, with a gorgeous world that doesn't overstay its welcome."
With that and the comments from Sharma and Booty in mind, it makes the idea of a sudden end for Compulsion Games all the more frustrating and upsetting — especially since I still feel the sting of last year's closure of The Initiative and the cancelation of Everwild, ZeniMax's new MMO, and Perfect Dark. My heart goes out to all developers affected, and I hope you're able to land back on your feet as soon as possible.
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