Microsoft has reportedly terminated the developer south of midnight

Microsoft is reportedly shutting down Xbox subsidiary Compulsion Games, the developers of the 2025 century 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-based Xbox studio will be affected by the potential shutdown.

Compulsion Games' last release was the 2025s South of midnightan action game that depicted the folklore and culture of the American South. South of midnight 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 is also available on Xbox Game Pass for Premium, Ultimate and PC subscribers to enjoy. The title won the Games for Impact award at The Game Awards 2025 and the Best New Intellectual Property award at the 22nd BAFTA Game Awards. But those accolades may not be enough to keep Compulsion Games afloat.

Force play can be turned off

Hours after Xbox Game Studios head Craig Duncan announced his departure from Microsoft, reports surfaced that the tech giant is considering more job cuts. Sources stated that Compulsion Games, the creators of South of midnight, We lucky fewand Contrastcan be turned off as part of Xbox's “reset actions”. However, sources with Compulsion Games added that the studio was in negotiations with Microsoft about its potential fate, although the details have not been disclosed. The report comes two months after Compulsion Games was looking to hire some programmers for a new, undisclosed IP project. Given the uncertain status of Compulsion Games, it is unknown what will happen to the unclaimed IP. As of this writing, neither Microsoft nor Compulsion Games have officially commented on the situation.

Scratch & Peek

Identify the wrapper while scraping off as little foil as possible.

Scratch & Peek

Identify the wrapper while scraping off as little foil as possible.

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The news comes just days after Xbox boss Asha Sharma released a letter outlining a rollout of the gaming industry's infrastructure. While Sharma's letter to Xbox employees did not indicate any layoffs, sources hinted that potential job cuts could occur after Microsoft's current fiscal year ends on June 30. Sharma stated that despite the acquisition of Activision Blizzard, Xbox spent over $20 billion over five years on ongoing capital expenditures, although profit margins declined by 3% year-over-year.

South of Midnight interviews 1 million players

While marketing budgets and game studios are potentially on the chopping block, it's unclear the extent of Xbox's planned cuts. Xbox's financial recovery may not end there. A separate report released on June 12 noted that selling the Xbox is reportedly “on the table” for Microsoft. This potential move would see Xbox restructured into a wholly owned subsidiary of Microsoft, similar to GitHub. Should Xbox become a wholly owned subsidiary, the gaming giant could either be sold to another company or used to create 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 be doubling down on its large IP addresses such as Halo, The Elder Scrollsand Fall-outas part of its efforts to produce more first-party titles at a faster pace. With Compulsion Games potentially closing, it remains to be seen what the fate of Xbox's smaller IPs will ultimately be.