Xbox Set to Close Acclaimed Studio Compulsion Games Behind South of Midnight

Xbox is reportedly set to close Compulsion Games, the studio behind the acclaimed titles South of Midnight and We Happy Few.

The total number of employees affected remains uncertain; while the studio’s LinkedIn page lists around 90 staff members, sources indicate the actual number may be higher, with several individuals actively seeking new job opportunities on social media. Just two months ago, the studio’s talent lead was promoting job openings for a “fascinating, intriguing, brand new IP.”

Update 1:15pm ET: A source from within Compulsion has mentioned that the studio’s leadership is currently in ‘negotiations’ with Microsoft regarding its future, though specifics of these discussions have not been revealed.

This news follows a recent open email from Xbox CEO Asha Sharma and the head of Microsoft Game Studios, which outlined the company’s financial and operational challenges, hinting at impending mass layoffs. Earlier today, it was also reported that Craig Duncan, head of Xbox Game Studios, has resigned after a brief tenure.

Sharma had expressed her support for Compulsion earlier this year, emphasizing the studio’s commitment to creating exceptional games. “The big things that we’re thinking about are we want to make great games,” she stated in April. “The Peabody Award for South of Midnight, Kiln coming out today. Like, I just feel like every day there’s something wonderful there.”

Booty had highlighted Compulsion as a key player in Xbox’s mission to produce award-winning games. “South of Midnight today won a Peabody Award, which I think is such a validation of the storytelling capability of games these days,” he remarked in the same interview. “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 that includes some of the biggest franchises on the planet—Call of Duty and Minecraft—but we’re also dedicated to nurturing new intellectual properties where these stories can be told, you know, in our studios like Compulsion and Double Fine that got some nominations for Keeper.”

Xbox has not provided a comment on this situation.