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.