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Award-winning Compulsion Games reportedly to shutter

Gabriel Stanford-Reisinger
‎ Gabriel Stanford-Reisinger
June 16, 2026

XBOX’s new CEO Asha Sharma, for better or worse, has a lot of eyes on her as reports of layoffs and studio closures bubble to the surface with a couple names popping up as front-runners for the matter. Award-winning dev, Compulsion Games, the studio behind 2018’s We Happy Few and more recently South of Midnight, is one of them.

Kotaku reports that the studio is facing closure, but reportedly in “negotiations” about the studio’s fate. Frankly, it’s a whatever situation here, Compulsion will likely either be allowed to go indie with the current leadership at the helm who will probably take control of things to see a new larger company to soften financial blows of their development or it will close down and the team band together to form a new studio.

It seems odd that Sharma — and the wider XBOX leadership — would decide to nix Compulsion, considering she herself has praised the studio earlier in the year for being an award-winning studio to Game File back in April.

“The big things that we’re thinking about are we want to make great games. And so, you know, [chief content officer Matt Booty] can talk about that. The Peabody Award for South of Midnight, Kiln coming out today. Like, I just feel like every day there’s something wonderful there.”

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compulsion gamesindustry newsmicrosoftrumorsouth of midnightwe happy fewxbox

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Gabriel Stanford-Reisinger
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Gabriel Stanford-Reisinger

Gabriel has been writing for the better part of nearly a decade and a huge fan of video games. He’s also huge into game preservation and physical media.

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