Xbox Set to Shut Down South of Midnight Studio Compulsion Games

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Last week, a letter from Xbox executives Asha Sharma and Matt Booty hinted at a sweeping “reset” for the platform, sparking speculation about which studios might be affected first. Kotaku’s investigation suggests that Compulsion Games—renowned for titles such as Contrast, We Happy Few, and South of Midnight—could be the initial target.

While Xbox has yet to issue an official statement, Kotaku’s latest update reveals that talks are actively underway between the two parties. This development has fueled rumors that Compulsion Games may be exploring a strategy to regain its independence, mirroring the move made by Toys for Bob a few years ago.

“South of Midnight” has earned critical acclaim, capturing prestigious honors such as a Peabody Award, a BAFTA, and the Games for Impact accolade at The Game Awards last year, underscoring the studio’s capacity for both artistic excellence and meaningful storytelling.

In 2018, Xbox embarked on a strategic expansion, acquiring Compulsion Games alongside a trio of other high‑profile studios—Undead Labs, Playground Games, and Ninja Theory—bolstering its portfolio of creative talent.

During the same period, Xbox unveiled The Initiative, a flagship AAA studio tasked with reviving the iconic Perfect Dark franchise. Unfortunately, the ambitious project was abruptly shut down amid extensive corporate restructuring and workforce reductions that unfolded last year.