Former South of Midnight director David Sears has admitted that he probably would not have funded the game if he had been in charge of Xbox. He also argued that Microsoft’s approach to financing smaller projects was ultimately unsustainable, so even though he appreciated the company’s support for creative games like South of Midnight, he expressed his belief that the financial consequences of this strategy were inevitable.
South of Midnight was developed by Compulsion Games, and it is an action-adventure title that was originally released in April 2025 for Xbox Series X/S and PC. In March 2026, the game also arrived on PlayStation 5 and Nintendo Switch 2. The story follows Hazel, a young woman exploring a Southern Gothic world inspired by American folklore. In any case, South of Midnight attracted more than one million players within its first three weeks, although it is also true that the figure included Xbox Game Pass subscribers as well. When Microsoft announced a major restructuring in July 2026, Compulsion Games was among the developers affected by the layoffs and studio departures, but instead of shutting the studio down, Microsoft allowed it to become independent again.
Former South of Midnight Director Questions Xbox’s Funding Strategy
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Image via Compulsion Games -
Image via Microsoft, Compulsion Games -
Image via Compulsion Games
During an interview with MinnMax, former South of Midnight director David Sears discussed Microsoft’s decision to fund smaller, unconventional games, admitting that he would probably not have approved the project himself. However, he also clarified that he genuinely wanted to make South of Midnight and deeply appreciated the opportunity that Microsoft had given the studio. Moreover, he explained that this situation had been discussed with other developers as well, who were also surprised by Microsoft’s willingness to invest in so many studios, as skepticism about how long the financial support could continue was only growing. After all, even some of the best indie games struggle to achieve commercial success.
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It is important to note that Sears left Compulsion Games in March 2025, which was several months before Microsoft announced its restructuring. In any case, he still praised the company for allowing the studio to regain its independence because it could have shut it down completely instead. He described the decision as remarkable and commendable and compared the situation to Microsoft’s treatment of Ensemble Studios, the developer behind Age of Empires.
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Overall, the director’s comments highlight a difficult problem that major publishers still face when balancing creative freedom and financial expectations. In other words, funding smaller projects can help companies diversify their portfolios and even attract new audiences, particularly fans of story-driven games, but these same investments can also become quite vulnerable when publishers decide to prioritize profitability because individual games often simply cannot generate enough revenue. On the other hand, South of Midnight is an example of how losing the support of a major publisher doesn’t mean that this is the end.
Compulsion Games has expressed its interest in collaborating with new partners, which could potentially allow the developers to pursue even more creative projects without having to operate under anyone else’s ownership. Of course, whether this will be successful remains to be seen, but the most important lesson here is that becoming independent from Xbox, like South of Midnight, is not always the end of the path in this increasingly unpredictable industry.
- Released
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April 8, 2025
- ESRB
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M For Mature 17+ // Blood, Strong Language, Violence
- Developer(s)
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Compulsion Games
- Publisher(s)
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Xbox Game Studios
- Engine
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Unreal Engine 5
