Layoffs have reportedly begun at Xbox, with developers at Compulsion Games, the studio behind the upcoming title South of Midnight, now seeking new employment. This development follows reports of a significant restructuring within Xbox under new CEO Asha Sharma, which is expected to involve the closure or potential spin-off of several Xbox Game Studios.
The immediate future of Compulsion Games itself remains uncertain. Earlier in June, rumors suggested Xbox was considering closing the Montreal-based studio, though leadership was reportedly in talks with Microsoft about spinning the studio off independently. The news of the layoffs emerged from individual developers posting announcements on LinkedIn, as compiled by reporter Mr Rebs.
Compulsion Games was founded in 2009 and was acquired by Microsoft in 2018. The studio is known for its work on Contrast and We Happy Few. The Compulsion layoffs may signal the beginning of broader changes, as CEO Asha Sharma aims to revitalize Xbox's business operations with what is described as a "reset."
Bloomberg previously reported that layoffs were anticipated to occur after June 30, following the conclusion of Microsoft's fiscal year. Beyond Compulsion, other studios such as Double Fine and Ninja Theory are also reportedly in discussions with Xbox regarding potential independence to avert closure. An update on the status of these negotiations has not been forthcoming, aside from a brief, ambiguous social media post from Double Fine's official X account.