One of the video game studios impacted by Xbox’s layoffs in July has successfully reclaimed its independence, as well as control over its intellectual property.
Compulsion Games, headquartered in Montreal, was founded as an independent studio in 2009 and acquired by Xbox in 2018. Its one release as a member of the Xbox Games Studio network was 2025’s South of Midnight, an action/adventure game set in a magical Deep South.
In July, Microsoft announced the first wave of a planned 3,200 job cuts throughout its Xbox department, alongside plans to spin out or shut down five of its studios. Compulsion Games was one of those five, alongside Double Fine Productions (Psychonauts), Ninja Theory (Hellblade), Undead Labs (State of Decay), and Arkane Studios (Deathloop, Dishonored).
Subsequently, on Aug. 20, Compulsion CEO Guillaume Provost revealed in an interview with GamesBeat’s Dean Takahashi that Compulsion’s management had successfully reacquired the studio, its staff, and the South of Midnight IP on Aug. 11.
South of Midnight is still available via its previous storefronts, including Steam and the PlayStation Network, but is currently self-published by Compulsion.
Provost told GamesBeat that no layoffs had been made at Compulsion as it transitioned to independence, and most of the team elected to stay together.
As for the other studios affected by Xbox’s July 6 layoffs:
- Double Fine Productions, headquartered in San Francisco, confirmed on July 28 that it had laid off 23 employees to return the studio to a “sustainable size.” It is once again fully independent and has control of its IP, such as Psychonauts, and will be exhibiting in Seattle on Labor Day weekend as part of the Penny Arcade Expo.
- Ninja Theory, from Cambridge, England, was one of the more unexpected shutdowns, as it had debuted Senua, a third entry in its Hellblade series, only a few days before the layoffs announcement. It has reportedly been spun off from Microsoft and will continue work on Senua under an unspecified new owner.
- Likewise, Seattle’s Undead Labs is currently under unidentified new ownership and still plans to release the long-anticipated third entry in its zombie survival series State of Decay at some point next year.
- Finally, Arkane’s status has yet to be firmly established. It formerly consisted of two studios, in Austin, Texas and Lyon, France, but its Austin office was closed down as part of a wholly separate wave of Xbox layoffs in May 2024. Several of the affected employees in Texas, including former studio head Harvey Smith, announced on Aug. 19 that they’d founded a new company, Black Pony Immersive, with plans to create new games in the same “immersive sim” subgenre as Dishonored.
Xbox is currently exhibiting at the Gamescom conference in Cologne, Germany.
