Microsoft has reportedly been shutting down developers since midnight

Microsoft is reportedly shutting down Xbox a subsidiary of Compulsion Games, developers of 2025 South of midnightas part of the company's plans to restructure the Xbox brand. It is currently unclear exactly how many employees at the Montreal Xbox studio will be affected by the potential closure.

The most recent release by Compulsion Games was from 2025 South of midnightan action game that depicted the folklore and culture of the American South. South of midnight it was later released on Switch 2 and PS5 on March 31, 2026 as part of Microsoft's efforts to expand some of its IPs to other platforms. South of midnight it's also available on Xbox Game Pass for Premium, Ultimate and PC subscribers. The title won the Games for Impact award at The Game Awards 2025 and the award for Best New Intellectual Property at the 22nd BAFTA Game Awards. However, these accolades may not be enough to keep Compulsion Games afloat.

Force games may be terminated

Hours after Xbox Game Studios head Craig Duncan announced his departure from Microsoft, reports said the tech giant is considering more cuts. Sources said that Compulsion Games, the developers South of midnight, We are happy littleand Contrastmay be closed as part of Xbox's “reset” efforts. However, Compulsion Games sources added that the studio was in discussions with Microsoft about its potential fate, though details were not disclosed. The news comes two months after Compulsion Games was looking to hire some programmers for a new, undisclosed IP project. Due to the uncertain status of Compulsion Games, it is unknown what will happen with the unannounced IP. At the time of writing, neither Microsoft nor Compulsion Games have officially commented on the situation.

Scratch & Peek

Identify the cover and scrape off as little of the foil as possible.

Scratch & Peek

Identify the cover and scrape off as little of the foil as possible.

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The news comes just days after Xbox CEO Asha Sharma released a letter that outlined a reset of the gaming branch's infrastructure. Although Sharma's letter to Xbox employees did not indicate any layoffs, sources indicated that potential job cuts could occur after Microsoft's current fiscal year ends on June 30. Sharma said that regardless of Activision Blizzard's buyout, Xbox has spent more than $20 billion over five years on continued investment, although profit margins fell 3% year over year.

South of midnight chat with 1 million players

While marketing budgets and game studios are potentially on the upswing, it's unclear what the extent of Xbox's planned cuts are. However, Xbox's financial reset may not stop there. A separate report published on June 12 said that selling the Xbox is reportedly “on the table” for Microsoft. That potential move would involve restructuring Xbox into a wholly owned subsidiary of Microsoft, similar to GitHub. If Xbox became a 100% subsidiary, the gaming giant could either be sold to another company or used to form a joint venture with other corporate partners.

Find the odd one before the timer reaches zero.

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The June 12 report also stated that Xbox may double its main IP addresses, such as Halo, The Elder Scrollsand Falloutas part of its efforts to produce more first-party titles at a faster pace. With the potential closure of Compulsion Games, it remains to be seen what the ultimate fate of Xbox's smaller IPs will be.