Compulsion Games gave Xbox a rare first-party release that did not feel like it came from a committee. South of Midnight had folklore, stop-motion style, blues music, and a voice of its own. Now the studio behind it has been hit by layoffs as the next round of Xbox cuts begins to take shape.
Several developers connected to Compulsion have started looking for new roles. Microsoft has not shared the number of people affected, and the studio’s long-term future has not been publicly settled.
Compulsion joined Xbox Game Studios in 2018 after making Contrast and We Happy Few. It never had the size or profile of Xbox’s biggest teams, but that was part of its value. The studio made strange, story-led games that gave the first-party lineup a different texture.
The layoffs come at a difficult time because South of Midnight only recently gave Compulsion its clearest identity under Xbox. The game was not trying to be another huge franchise machine. It was a focused action-adventure built around a specific place, sound, and mood.
That makes the cuts feel larger than a single staffing move. Xbox has spent years promising variety across its studios, and Compulsion was one of the teams that helped make that promise believable.
South of Midnight stood out because it offered something different. Its version of the American South mixed folklore, family trauma, music, monsters, and handmade-looking animation in a way Xbox does not often get from its own studios.
Combat and platforming did not land for everyone, and some players wanted more depth from its systems. Even so, it gave Xbox something memorable at a time when the company badly needed first-party games that felt personal.
Compulsion made the kind of smaller creative release Xbox often says it wants, then became part of another round of cuts before fans could see where the studio might go next.
Microsoft spent years buying studios and pitching Game Pass as a home for many kinds of games. The idea was simple: big franchises could sit beside smaller, riskier projects, giving players more reasons to stay in the ecosystem.
Cuts at a studio like Compulsion make that pitch harder to trust. Players already expect Halo, Forza, Gears of War, and Call of Duty to survive. The real test is whether Xbox can also protect the teams making strange games that do not look like everything else on the calendar.
Losing people at Compulsion does not only hurt the studio. It makes Xbox feel less willing to stand behind the projects that gave its lineup more personality.
The people affected need support first. Layoffs are not an abstract strategy. They are developers losing jobs after helping ship a game Xbox was able to promote as part of its first-party lineup.
Compulsion needs more certainty about its future. Fans do not need polished corporate language about priorities. They need to know whether the studio continues, what work remains active, and how much of the team is still in place.
South of Midnight showed that Xbox still had room for games with a sharper identity. If Compulsion loses that space now, the lineup becomes less interesting at the exact moment when Xbox needs more unique games.
