“We’re going to take things slow”: South of Midnight devs now own the rights to all their games again, after quitting Xbox, and are working on a new game
Compulsion Games, the studio behind South of Midnight and We Happy Few, has completed a management buyout that fully separates it from Microsoft and Xbox, regaining ownership of all its original intellectual property. The move follows Microsoft's July announcement of roughly 3,200 job cuts and the spinning off or sale of several studios, and marks a notable case of a developer returning to independence after being folded into Xbox Game Studios.
CEO Guillaume Provost said Compulsion is getting back all its publishing rights, though transferring ownership on platforms beyond Steam, such as Switch and PlayStation, will take longer; Steam sales of South of Midnight will now go directly to Compulsion after Valve's cut. Provost described the exit terms as relatively generous given the alternative of closure, noted Microsoft provided some financial "runway", and said most team leads have stayed on despite the studio's uncertain future. He added that Compulsion, founded in 2009 during a recession, plans to move cautiously while exploring new opportunities, including continuing an unannounced project and considering future collaborations.
- Compulsion Games splits from Microsoft via management buyout
- Studio regains rights to South of Midnight, We Happy Few
- Follows Microsoft's July layoffs and studio restructuring
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Compulsion Games is a video game studio founded in 2009 and based in Canada. It made We Happy Few and South of Midnight, games whose stories and settings were created by the studio. Those creations are known as intellectual property, or IP, and ownership gives a company control over how they are made available and used.
Microsoft bought Compulsion in 2018 and made it part of Xbox Game Studios. The studio has now completed a management buyout, in which its leaders bought it back and restored its independence. Microsoft has also been cutting jobs and changing which studios it owns, making the move part of wider upheaval in the games industry.
Regaining ownership gives Compulsion more control over its games and the money they earn, though transferring rights across some platforms may take time. As an independent studio, it will need to manage its own finances and choose how to fund future work. The outcome matters to other developers because it shows one way a studio can separate from a large publisher and continue operating.
Both sides, in good faith
The strongest fair case each way — we don't pick a winner.
The case for
Developers fundamentally value creative autonomy and ownership of their work, which are central to artistic integrity. Compulsion Games can now direct its own creative vision, retain revenues from Steam sales, and make decisions based on artistic merit rather than corporate strategy. The studio's distinctive games reflect creative voices that flourish with ownership stake; independence restores conditions for bold, innovative work without corporate mandates.
The case against
Game development requires substantial sustained investment, and independent studios face significant financial risk—most struggle without publisher backing. Microsoft provided not merely funding but infrastructure, distribution, marketing, and stability that allowed Compulsion to develop quality titles and maintain employment. The studio's acknowledged need to move cautiously and uncertain future reflect the precarity independence introduces; corporate partnership, whilst involving creative constraints, typically results in more finished games and greater staff security.