South of Midnight developer Compulsion Games is officially independent of Xbox again after completing a management buyout from Microsoft. The Montreal developer spent eight years as part of Xbox after Microsoft acquired it in 2018, culminating in the release of South of Midnight as its major first-party project.
Compulsion Games has been around considerably longer than its Xbox years. Guillaume Provost founded the studio in 2009, eventually releasing Contrast in 2013 and We Happy Few in 2018 before Microsoft purchased the developer during a period of rapid first-party expansion, when Phil Spencer was head of Xbox. Its most recent game, South of Midnight, arrived in 2025 as a stylized action-adventure rooted in Southern Gothic folklore, but fell short of Microsoft’s internal commercial expectations. After a leadership shake-up at Xbox earlier in 2026, Microsoft confirmed in July that Compulsion would eventually return to its management, but the separation process was still underway.
South of Midnight Developer Officially Splits From Xbox
-
-
-
Image via Microsoft, Compulsion Games
In a recent interview with GamesBeat, Provost has now confirmed that the management buyout is complete and Compulsion has finished separating from Xbox. Under the deal, management acquired the studio and its staff, while Compulsion also regained ownership of its original IP, including Contrast, We Happy Few, and South of Midnight. Additionally, Compulsion is regaining its publishing rights, although Provost explained that transferring ownership across storefronts such as Steam, PlayStation, Nintendo, and Xbox will take additional time. Provost added that “buying the games is supporting the studio as a result of that change,” meaning new sales now directly contribute to Compulsion’s independent future.
Rearrange the covers into the correct US release order.
Rearrange the covers into the correct US release order.
Easy (5)Medium (7)Hard (10)
Compulsion’s management buyout stands out against the much harsher outcomes produced by Xbox’s broader restructuring. Microsoft’s July Xbox restructuring included plans to eliminate approximately 3,200 roles throughout FY27, with roughly 1,600 positions affected immediately. Compulsion was one of several developers identified for a change in ownership, but Provost revealed that closure was also a possibility before the management buyout emerged as an alternative. Keeping the team intact therefore became his priority. When asked whether employees wanted to remain together, Provost recalled being told that they would “rather eat rocks and drink gasoline” than be split up. He nevertheless described Microsoft’s eventual handling of the exit as “gracious,” compared with the possibility of everyone losing their jobs.
Independence gives Compulsion greater creative freedom, but it also leaves the studio responsible for building a sustainable business without Microsoft’s resources. Part of the team is already working on a project that was in development before Xbox’s Asha Sharma changed course, although Provost has not revealed what it is. The studio head is also meeting with potential partners and exploring routes toward stable funding, although he does not appear to be rushing into another outside investment. Compulsion now has more freedom to collaborate with outside studios and IP owners.
Compulsion ultimately emerges from the Xbox reset that affected The Elder Scrolls and other franchises as owner of its own studio, original IP, and much of its creative identity intact rather than disappearing entirely in the restructuring. What happens next will determine whether the buyout becomes more than simply an escape from closure. Provost wants Compulsion to remain profitable while continuing to make the unusual stories and worlds that have defined its games, allowing the newly independent studio to preserve that identity on its own terms.
- Released
-
April 8, 2025
- ESRB
-
M For Mature 17+ // Blood, Strong Language, Violence
- Developer(s)
-
Compulsion Games
- Publisher(s)
-
Xbox Game Studios
- Engine
-
Unreal Engine 5
