South Of Midnight Dev Seeking New Collabs Following Xbox Split
Compulsion Games, the studio behind South of Midnight, has begun seeking collaboration opportunities with other entertainment companies after regaining its independence following Xbox’s latest round of layoffs. The move matters because it shows how affected studios are trying to secure new work and funding quickly after Microsoft’s cuts, while also highlighting the wider upheaval across Xbox’s first-party development network.
In a LinkedIn statement, the Montreal-based developer said it was opening itself to partnerships and emphasised the award-winning pedigree of South of Midnight, which it said had earned a BAFTA, a Peabody and seven Canadian Game Awards. The game launched on Switch 2 in March and reportedly passed one million players within a month, although no official sales figures have been released and Game Pass likely boosted reach. The article adds that other Xbox-linked studios are also changing status, with Double Fine becoming independent again, Ninja Theory and Undead Labs moving towards new ownership, Arkane reviewing options, and Xbox reportedly planning to cut about 3,200 jobs in FY27 after an initial 1,600 role eliminations.
In short
- Compulsion is seeking new partnerships after splitting from Xbox
- The studio is returning to independent development
- Xbox’s wider restructuring is affecting several studios
Steelman: both sides, in good faith
The strongest fair case each way — we don't pick a winner.
The case for
Supporters of the restructuring argue Xbox must make tough choices to allocate resources effectively in a competitive market. Studios like Compulsion Games, proven by their critical acclaim and commercial success with South of Midnight, are well-positioned to secure partnerships and funding on the open market. Competition and independence often drive better creative outcomes than corporate ownership. Unfettered from potential corporate constraints, these studios may execute their vision more effectively and attract mission-aligned partners.
The case against
Critics contend the cuts reveal poor strategic planning by Xbox rather than genuine business necessity. Compulsion Games delivered a successful, critically acclaimed game, yet faces uncertainty instead of continued support from its publisher. Microsoft's pattern of acquiring studios only to divest them suggests fundamental mismanagement of capital and strategy. Since Microsoft has substantial financial resources, such cuts appear driven by failed planning rather than necessity, damaging industry stability and worker confidence.
Explained simply
Compulsion Games is a Montreal-based studio that made South of Midnight, a story-driven video game. It was part of Xbox, Microsoft’s gaming division, and has now regained its independence after a round of job cuts.
The studio is known for South of Midnight, which has received several industry awards. Its next work may depend on partnerships with other entertainment companies, a route that can help independent studios find projects and funding.
The change is part of wider upheaval among studios linked to Xbox as Microsoft reduces jobs and reviews how some teams are organised. These shifts can affect who funds games, who owns the studios that make them and what projects get made.
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