Compulsion Games Might Be Getting Shut Down By Xbox, Says Report
Microsoft is accelerating plans to shut down multiple Xbox Game Studios, including Compulsion Games, with reports indicating negotiations for studio independence are underway. The move follows recent layoffs and budget cuts at Xbox. Other studios like Double Fine and Ninja Theory are also reportedly at risk. Microsoft’s restructuring continues despite recent game announcements at Summer Game Fest.
What changed
New reports confirm shutdowns are imminent for Compulsion Games and other studios, with negotiations for independence now explicitly mentioned.
Live updates
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Microsoft pushes ahead with Xbox studio shutdowns as Compulsion Games faces closure
confidence 88%Microsoft is accelerating plans to shut down multiple Xbox Game Studios, including Compulsion Games, with reports indicating negotiations for studio independence are underway. The move follows recent layoffs and budget cuts at Xbox. Other studios like Double Fine and Ninja Theory are also reportedly at risk. Microsoft’s restructuring continues despite recent game announcements at Summer Game Fest.
What's confirmed:
- Microsoft is planning to shut down multiple first-party Xbox Game Studios, including Compulsion Games.
- Affected studios, including Compulsion Games, are negotiating to secure independence from Xbox.
- The shutdowns follow broader layoffs and budget cuts at Xbox Game Studios.
- Reports of studio closures come shortly after announcements for games like *Senua’s Saga* at Summer Game Fest.
Still unconfirmed:
- Double Fine and Ninja Theory are also reportedly facing shutdowns at Xbox, though confirmation is pending.
- The exact timeline for Compulsion Games’ closure or independence deal remains unclear.
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Xbox Shuts Down Compulsion Games Amid Restructuring
confidence 95%Xbox is shutting down Compulsion Games, the Montreal studio behind *South of Midnight* and *We Happy Few*, following recent awards and executive departures. The move aligns with broader layoffs and budget cuts at Xbox Game Studios. Negotiations may still be underway, but the shutdown is widely reported as imminent. Microsoft’s restructuring includes potential closures of other studios like Arkane.
What's confirmed:
- Xbox is shutting down Compulsion Games, the studio behind *South of Midnight* and *We Happy Few*, according to multiple sources.
- The shutdown follows recent executive departures and broader restructuring at Xbox Game Studios.
- Compulsion Games won seven awards at The Canadian Game Awards, including Game of the Year, weeks before the reported shutdown.
- Xbox is planning major job cuts in July 2026, with layoffs expected shortly after Microsoft’s fiscal year closes on June 30.
- Budget cuts are being made in marketing and other areas of Xbox’s business, according to sources familiar with the company’s strategy.
Still unconfirmed:
- Arcane Studio could also be at risk of closure as part of Microsoft’s restructuring efforts.
- The exact scale of the upcoming layoffs remains unclear.
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Xbox Reportedly Shutting Down Montreal Studio Compulsion Games
confidence 95%Microsoft’s Xbox division is preparing to close Compulsion Games, the Montreal studio behind *South of Midnight* and *We Happy Few*, according to multiple reports. The move follows recent executive departures and broader restructuring at Xbox Game Studios. Sources confirm the shutdown is imminent, though negotiations may be ongoing. The decision comes shortly after Xbox executives praised the studio’s Peabody Award-winning work.
What's confirmed:
- Xbox is planning to close Compulsion Games, the studio behind *South of Midnight* and *We Happy Few*, as part of a reported business overhaul.
- The head of Xbox Game Studios departed the company shortly before the reported shutdown of Compulsion Games.
- The shutdown follows Xbox executives praising Compulsion Games’ Peabody Award-winning work just two months ago.
- Compulsion Games is among multiple Xbox studios reportedly under threat of closure or restructuring.
Still unconfirmed:
- Sources suggest the timing of the shutdown is still uncertain, with negotiations potentially ongoing between studio leadership and Microsoft.
- The move may signal deeper cuts across Xbox Game Studios, including potential threats to other studios like Ninja Theory and Double Fine.
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Xbox Reportedly Plans to Shut Down Compulsion Games Amid Studio Restructuring
confidence 88%Multiple reports indicate Microsoft’s Xbox division is preparing to close Compulsion Games, the Montreal studio behind *South of Midnight* and *We Happy Few*, though studio leadership is engaged in negotiations with Microsoft. The move follows broader layoffs and potential closures across Xbox Studios, including rumored threats to Ninja Theory and Double Fine. Sources disagree on timing and finality, but the studio’s future remains uncertain.
What's confirmed:
- Compulsion Games, developer of *South of Midnight* and *We Happy Few*, is reportedly under consideration for closure by Xbox as part of a broader restructuring effort.
- Studio leadership at Compulsion Games is currently in negotiations with Microsoft over potential closure terms, according to multiple updates.
- The closure would affect at least two Xbox studios, with Arkane Lyon also reportedly at risk, though Arkane’s status is less confirmed than Compulsion’s.
- Xbox has already initiated layoffs and executive departures, signaling an upcoming reset across its studios.
Still unconfirmed:
- Ninja Theory and Double Fine are also reportedly under threat of closure, though no official confirmation exists.
- Mass layoffs at Xbox could extend to late June 2026, though no direct link to studio closures is confirmed beyond reports.
- Arkane Lyon may face closure alongside Compulsion Games, but sources conflict on its inclusion in the latest round of restructuring.