South of Midnight Director Would Have Cut Xbox Funding Earlier

David Sears, creative director of the Xbox Game Studios-published title South of Midnight, has stated that he likely would have ended the game's extensive funding earlier if he had been in charge at Microsoft. Speaking in a recent interview with MinnMax, Sears described the previous era of Xbox's generous development funding as "unsustainable."

South of Midnight launched in 2025, seven years after Compulsion Games' previous title. Despite critical acclaim, the game did not achieve commercial success. This year, Compulsion Games parted ways with Xbox as part of a wider restructuring within Microsoft's gaming division. This restructuring has involved significant layoffs, studios becoming independent, and project cancellations.

Sears expressed consistent concern during South of Midnight's development that the funding would eventually be cut, leading to potentially "traumatic results downstream." When asked if he would have made the decision to cut funding earlier, he responded, "Yeah, probably."

He elaborated that while he wanted to make South of Midnight, and ultimately did, he acknowledged that a financial model dependent on such prolonged, substantial investment was inherently unstable. "Of course it was going to have a shocking outcome," he stated.

Microsoft acquired Compulsion Games in mid-2018, aiming to bolster the Game Pass service with day-one titles. This period saw Xbox acquire several studios, including Playground Games, Undead Labs, and Ninja Theory. Sears commented that while Microsoft's corporate culture has evolved to be more "humane" since the 90s and early 2000s, he remained apprehensive about the long-term stability of this funding approach.

Sears also praised Microsoft for allowing studios to spin off rather than face closure, citing Compulsion Games' successful bid for independence. This contrasts with situations like Ninja Theory, which closed after failing to secure a buyer following its separation from Xbox. Earlier this year, Microsoft shifted development of the next mainline Halo game to Activision and placed other studios like World's Edge and Rare under the Activision umbrella, indicating a strategic focus on maximizing revenue from its major franchises.

South of Midnight is Compulsion Games' third title, following Contrast (2013) and We Happy Few (2018). The studio retains ownership of its games and publishing rights subsequent to its departure from Xbox.