Simply days after signalling that large-scale layoffs at Xbox are imminent as half 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 Glad Few (by way of Kotaku).
Neither Xbox or Compulsion Games have but made an official assertion relating to the studio’s closure or related layoffs, however a number of Compulsion Games staff have posted on LinkedIn and different social media platforms that they’re searching for work.
Primarily based in Montreal, Canada, Compulsion was based in 2009 and launched its first sport, Distinction, in 2013. We Glad Few adopted in 2018, and its most up-to-date launch, South of Midnight, launched in 2025 to a formidable crucial 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 major franchises. A Bloomberg report last week said major layoffs were going to be a part of that overhaul, in numbers that all but guaranteed at least one studio closure.
Sharma came close to confirming that in a message shared with Xbox employees: “We expanded our studio system when we needed a pipeline of content to meet multiple strategies across subscription, streaming, and devices. In the process, we have found ourselves over extended as we executed on changing strategies in a landscape of more readily available content.”
Congratulations to the @CompulsionGames team on their Peabody award. A well-deserved recognition for storytelling that truly matters! pic.twitter.com/LmWV1CgafFApril 23, 2026
Compulsion’s reported closure comes simply months after Xbox’s new bosses bragged about the studio’s achievements: In April, Sharma posted on X to congratulate Compulsion on its Peabody award, calling it “a well-deserved recognition for storytelling that actually issues.” In a Recreation File interview printed the subsequent day, she stated “the massive issues that we’re pondering about are we need to make nice video games,” naming South of Midnight for example of the sort of high quality Xbox would supposedly be pursuing.
“South of Midnight at present received a Peabody Award, which I believe is such a validation of the storytelling functionality of video games as of late,” Matt Booty, Xbox’s new chief artistic officer, stated in the identical interview earlier than elaborating that Microsoft is “devoted to locations the place new [intellectual property] can come to life and the place these tales could be advised.”
If Compulsion is the primary closure to occur since Sharma’s letter to Xbox staff was posted, it fairly presumably will not be the final: With fewer than 100 staff listed on the corporate’s LinkedIn web page, it represents solely a small proportion of the full cuts Xbox is anticipated to make over the subsequent a number of weeks.
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