Compulsion Games, the studio behind titles such as We Happy Few and South of Midnight, is returning to independent management following a significant reorganization at Xbox. This transition comes as part of broader downsizing efforts at Microsoft, which are expected to impact approximately 4,800 employees across the division.
While earlier reports suggested Compulsion Games was facing imminent closure, the Montreal-based developer will now operate independently and maintain ownership of its intellectual property and existing game catalog, including Contrast, We Happy Few, and the upcoming South of Midnight. The studio expressed gratitude for its time with Xbox and the support provided.
"We are excited to continue building the distinctive games that define Compulsion," the studio stated on Bluesky. "Our immediate priority is to support our team throughout this transition period." The company emphasized its commitment to creating unique games that tell important stories and resonate with players.
The wider Xbox restructuring involves eliminating 1,600 roles immediately, with a further reduction of 3,200 headcount planned throughout the 2027 financial year. Compulsion Games is one of four development studios leaving Microsoft ownership as part of this initiative. The status of employees who may have been seeking new roles due to previous closure rumors, and whether the studio will implement further staff adjustments due to the financial demands of independent operation, remains unclear.