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Gamerant
South of Midnight Dev First Xbox Studio Hit With Layoffs
Compulsion Games, known for 'South of Midnight', has laid off staff as part of Xbox's restructuring efforts. The studio, despite the game's critical acclaim, has not performed well financially, prompting concerns about more extensive layoffs within Xbox. Recent announcements regarding studio closures, like Ninja Theory, add to the unsettling atmosphere in the gaming sector, leading to speculation about Xbox's future direction under its new CEO, Asha Sharma. With significant changes likely ahead, many developers face an uncertain future.
MonitorConfidence: MediumShort term horizonExecution risk: High
Published 25 Jun 2026, 10:00 UTC3 min read
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Summary
TL;DR
- Compulsion Games laid off numerous employees amidst Xbox's restructuring.
- Critical reception of 'South of Midnight' did not translate into financial success.
- Rumors of potential studio closures are circulating within Xbox.
- Microsoft's gaming division is under scrutiny due to performance issues.
- A new focus on restructuring could impact many gaming developers.
Interesting facts
- 'South of Midnight' attracted over a million players within its first month.
- The layoffs include narrative designers, 3D artists, and dialogue designers.
- Previous Compulsion Games title, 'We Happy Few', took a long production time.