Xbox plans to shut down South of Midnight dev Compulsion Games

As part of the organization's "reset" under new CEO Asha Sharma, Xbox is cutting Compulsion Games, the BAFTA and Peabody-award winning team behind South of Midnight.

First shared by Kotaku, I can corroborate this report. Notably, this news caught numerous Xbox employees by surprise, as even many at the higher levels were not aware of the shuttering.

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An awards darling shuttered

Based in Montreal, Canada, Compulsion Games was first acquired back in 2018, shortly before the launch of the We Happy Few, the team's second-ever game. Under Xbox Game Studios, Compulsion grew to over 100 developers, eventually releasing South of Midnight in 2025 on Xbox and PC, before bringing it to PS5 and Nintendo Switch 2 earlier this year.

Focusing on a young Black woman named Hazel, South of Midnight fused modern elements with classical Southern Gothic elements, re-imagining myths and legends from the American Deep South, such as the story of the alligator Two-Toed Tom (as seen above).

This Southern Gothic fantasy adventure didn't light the sales charts on fire, but was received well critically, and went on to win Games for Impact at the Game Awards, best new IP at the BAFTAs, and even a Peabody for its narrative. At the time, both Sharma and chief content officer Matt Booty praised Compulsion Games for its narrative achievements and awards.

Over the last few months, Compulsion Games has been working on a new IP, though the team was extremely proud of its work on South of Midnight.

I'll have far more to say in the future, but for now I'll say this is an absolute disgrace for Xbox management. South of Midnight is a special game, and this team deserved far better.