Microsoft is reportedly planning to close down South of Midnight and We Blissful Few developer Compulsion Games.
Kotaku reviews that the layoffs could complete greater than 90 workers, simply months after the Canadian studio was promoting jobs for a brand new IP. Microsoft has but to remark. Compulsion Games additionally developed 2013’s Distinction.
In an replace, Kotaku mentioned one supply indicated Compulsion management is in “negotiations” with Microsoft over the studio’s destiny. It isn’t recognized the place these negotiations could lead. IGN has requested Microsoft for remark.
The information comes simply hours after it emerged that head of Xbox Recreation Studios Craig Duncan and chief of workers Louise O’Connor had left Microsoft after many years on the firm.
South of Midnight, an motion journey sport set in a fictionalized American Deep South, launched in April 2025 and whereas it was well-received by critics, it did not discover a important viewers. It launched on PlayStation 5 and Nintendo Swap 2 in March.
Simply final week, new Xbox boss Asha Sharma warned of an organization “reset” that almost all took as a sign that Microsoft deliberate massive layoffs and studio closures. One analyst informed IGN “the studios most uncovered are sensible for status and rotten for the spreadsheet.” Microsoft was then mentioned to be dashing up improvement on new The Elder Scrolls, Fallout, and Halo video games because it thought of restructuring and even spinning off its gaming department.
Sharma’s ground-shaking memo revealed that Microsoft’s gaming enterprise at present has a 3% accountability margin (assumed to imply revenue margin), which is down year-on-year. “Excluding Activision Blizzard King, over the previous 5 years, we now have spent over $20 billion on ongoing investments in our content material, platform, and {hardware} subsidy, however our annual income has declined almost half a billion throughout that point. Going ahead, this can’t proceed,” Sharma mentioned.
Following the discharge of the memo, Microsoft CEO Satya Nadella mentioned “there’s extra monetization of Xbox video games occurring on YouTube” than at Xbox, including the Xbox group wanted to determine “innovate each in {hardware}, in addition to within the video games, going ahead in an economically viable manner.”
“Nobody can accuse Microsoft of not having invested for the final 25 years,” Nadella mentioned. “Now, we now have to show this right into a sustainable enterprise that delivers what’s essentially one of one of the best sources of leisure, nonetheless.”
Wesley is Director, Information at IGN. Discover him on Twitter at @wyp100. You’ll be able to attain Wesley at wesley_yinpoole@ign.com or confidentially at wyp100@proton.me.