According to media reports, Canadian developer studio Compulsion Games is facing closure by Microsoft. The studio's management is currently negotiating with Xbox leadership about the team's future.
The gaming magazine Kotaku reports this, citing internal sources. The possibility is that Compulsion will become completely independent again.
The impending cut comes as a huge surprise. Their current game, the Southern adventure "South of Midnight," swept up numerous awards last year, including one at the Game Awards.
The PlayStation 5 version was finally released in early 2026 (our reviewBut behind the scenes at Xbox, things are in turmoil. Microsoft CEO Satya Nadella emphasized over the weekend that after 25 years of subsidies, the division finally needs to become a sustainable business.
Leadership crisis and austerity measures
The top management is simultaneously collapsing. Craig Duncan, the boss of Xbox Game Studios, has resigned after less than two years in office. took his hatHis chief of staff, Louise O'Connor, is also leaving the company. This leaves a massive power vacuum in the midst of an existential crisis.
For the approximately 90 employees in Montreal, the situation is unbearable. Some employees, like the author Zaire Lanier, are already publicly searching for new jobs on social media. The closure hasn't been officially announced yet, but the signs point to impending disaster.
Good reviews are apparently no longer enough for Microsoft. If the sales figures aren't right, the tech giant pulls the plug. The days when Game Pass cross-subsidized everything are definitely over. The system has cracks.
The dream is over. With "South of Midnight," Compulsion Games delivered a fine, unique piece of software that was even hailed as the "most beautiful simple game" on the PS5. It is precisely these creative niche studios that Microsoft is now ruthlessly wiping out to refinance its past billion-dollar acquisitions.
The only hope now rests on the success of the independence negotiations. If Microsoft abandons the studio, the only option left is a return to the indie scene. One can only hope so.
What do you think of Microsoft's tough approach – does this mean Xbox is losing its creative identity for good, or is this cost-cutting measure simply necessary from an economic standpoint?
Well, the game didn't appeal to me at all; anyone who makes games like this shouldn't be surprised.