Xbox is reportedly closing South of Midnight studio Compulsion Games after bragging about its award-winning developers earlier this year

**TL;DR:** Xbox is reportedly closing South of Midnight studio Compulsion Games after bragging about its award-winning developers earlier this year

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Just days after signalling that large-scale layoffs at Xbox are imminent as part of its ongoing overhaul, Microsoft's gaming division is reportedly planning to shutter Compulsion Games, the award-winning studio behind South of Midnight and We Happy Few (via Kotaku ). Neither Xbox or Compulsion Games have yet made an official statement regarding the studio's closure or associated layoffs, but multiple Compulsion Games employees have posted on LinkedIn and other social media platforms that they are looking for work.

(Image credit: Compulsion Games) Based in Montreal, Canada, Compulsion was founded in 2009 and released its first game, Contrast, in 2013. We Happy Few followed in 2018, and its most recent release, South of Midnight, launched in 2025 to an impressive critical reception: We scored it 83% in our review , saying "its poignant tale of hope and sorrow tailored to Deep South mythos keeps its head raised high," and it won the Games for Impact award at the 2025 Game Awards, Best New Intellectual Property at the BAFTAs, and a Peabody Award for interactive media.

Xbox CEO Asha Sharma has warned recently of major changes coming to Xbox, including a refocusing of resources on its ma

Source: PC Gamer

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Last updated: June 16, 2026.

Additional context: early-cycle stories often look bigger in headlines than in day-to-day impact. The useful move is to identify the smallest set of facts that would change your decision, then wait for those facts to land.

Additional context: early-cycle stories often look bigger in headlines than in day-to-day impact. The useful move is to identify the smallest set of facts that would change your decision, then wait for those facts to land.