XBOX plans to shut down South of Midnight developer Compulsion Games, according to a new report.
It’s unclear how many people work at the studio that also created We Happy Few and Contrast, and the full numbers of layoffs and firings are still undecided, according to Kotaku.
South of Midnight launched last year and won numerous awards, including the Games for Impact award at The Game Awards and Outstanding Achievement in Animation at the 29th Annual D.I.C.E. Awards. Apparently, the game’s reception did not match its sales.
This report of Compulsion’s impending closure comes less than a week after a company-wide memo from XBOX CEO Asha Sharma spoke of an “XBOX Reset” over the next 100 days, where she spoke of “surprising and even frustrating” realities for some at the company. Bloomberg’s Jason Schreier reported the same day that layoffs and closures would be coming.
It sure seems like Compulsion won’t be the only studio to be impacted by layoffs, but either way, it’s going to be a tumultuous few weeks and months for XBOX and its studios as the company looks to bounce back from big-time declines in revenue.
“We will end this fiscal year at about a three percent accountability margin, down year-over-year,” Sharma said in the memo last week. “Excluding Activision Blizzard King, over the past five years, we have spent over $20 billion on ongoing investments in our content, platform, and hardware subsidy, but our annual revenue has declined nearly half a billion during that time. Going forward, this cannot continue.”
Since taking over as CEO in February, Sharma has led the charge on a rebirth-like rebrand for XBOX, including a Game Pass price reduction and the return of exclusives for the console, like Gears of War: E-Day in 2026 and Clockwork Revolution in 2027.
Update on June 15 at 3:25pm CT: Bloomberg’s Jason Schreier is reporting that Compulsion, along with other XBOX studios Ninja Theory (Hellblade series) and Double Fine (Kiln, Keeper, Psychonauts), are currently in active negotiations to go independent in an effort to prevent full studio closures. This is reportedly not the full list of studios in flux, either.
