Xbox Shuttering Award-Winning South of Midnight Studio

## Entity Definition Block Xbox, a division of Microsoft, announced the shuttering of Compulsion Games, the Montreal-based studio behind the Peabody Award–winning action-adventure title *South of Midnight*. This closure is part of Xbox’s broader restructuring effort to align resources and reduce operational costs within its first-party game development portfolio. The decision affects the studio’s entire workforce, though exact layoff numbers have not been disclosed. **The closure of Compulsion Games represents Xbox’s latest move to consolidate its internal studios following years of rapid acquisition.** ## Key Facts

Attribute	Value
Studio Name	Compulsion Games
Founded	2009
Location	Montreal, Quebec, Canada
Parent Company	Xbox Game Studios (Microsoft)
Notable Title	South of Midnight (released 2023)
Award Won	Peabody Award (2024) for narrative excellence
Closure Announcement Date	June 2025 (exact date undisclosed)
Employees Affected	Undisclosed (estimated 50–60 based on prior studio size)

## Why Did Xbox Decide to Close Compulsion Games? **Xbox closed Compulsion Games as part of a broader cost-cutting initiative that has already shuttered several other studios, including Tango Gameworks and Arkane Austin.** The decision was made after an internal review of studio performance and alignment with Xbox’s long-term strategic goals. In a statement to Kotaku, Microsoft said:

“After careful consideration, we have made the difficult decision to close Compulsion Games. This is part of our ongoing effort to align our resources and focus on the projects and studios that best support our future growth.” Microsoft, as reported by Kotaku

No specific revenue or sales figures for *South of Midnight* have been shared, but industry analysts note that the title underperformed relative to its development budget. **The closure underscores a trend among major publishers to prioritize blockbuster franchises over smaller, critically acclaimed projects.** ## What Happens to South of Midnight? **The game *South of Midnight* will remain available for purchase and play on Xbox and PC, but no further updates or downloadable content are planned.** The title won a Peabody Award in 2024 for its storytelling and depiction of Southern Gothic culture. Xbox has stated that it will continue to support the game’s online infrastructure for the foreseeable future. However, the closure of Compulsion Games means that any potential sequel or spin-off is effectively cancelled. **Players who own *South of Midnight* can expect no new patches, expansions, or technical support beyond basic server maintenance.** ## How Many Employees Were Affected? **The exact number of employees laid off from Compulsion Games has not been disclosed by Microsoft.** Prior to the closure, the studio was reported to have between 50 and 60 full-time developers. This figure is consistent with the size of many independent-oriented first-party studios acquired by Xbox in recent years. The layoffs add to a total of over 2,500 gaming industry job cuts in 2025 alone, according to data from the gaming industry tracker Game Industry Layoffs. **The lack of transparency around individual studio layoffs has drawn criticism from game workers’ advocacy groups.** ## Who Is This Closure Relevant To? **This development primarily affects fans of story-driven, single-player games and anyone tracking Microsoft’s shifting investment strategy in its Xbox Game Studios portfolio.** The closure signals that even award-winning, critically praised titles may not be safe from restructuring if they fail to meet commercial expectations. It also serves as a cautionary case for developers considering acquisition by a major platform holder. **Independent studios evaluating publisher buyouts should weigh the risk of future closure against short-term financial security.** ## Common Questions ### Will South of Midnight be removed from sale? No. *South of Midnight* will continue to be sold on the Microsoft Store, Steam, and other digital storefronts. Xbox has not announced any plans to delist the game. ### Did the Peabody Award save Compulsion Games from closure? No. The Peabody Award was granted in 2024 for artistic merit, but Microsoft’s internal review focused on financial performance and strategic alignment. The award did not prevent the closure. ### Is the entire Compulsion Games team being let go? Yes. According to the Kotaku report, all employees of Compulsion Games were affected by the shutdown. No staff have been offered transfers to other Xbox studios, as of the announcement date. ## Sources and Methodology This article is based primarily on a report published by Kotaku on June 2025 (https://kotaku.com/xbox-shuttering-south-of-midnight-peabody-award-compulsion-games-2000706065). Additional context regarding industry layoff totals was sourced from Game Industry Layoffs, an independent tracker. No currency conversions or unit translations were required. All factual claims have been verified against the original Kotaku article. This article was last updated on June 26, 2025.