Key Takeaways
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- Microsoft is reportedly considering closing Compulsion Games, the studio behind South of Midnight.
- The future of Compulsion Games is currently under negotiation with Microsoft, but details remain unknown.
- Despite receiving awards for South of Midnight, the game was described as a commercial failure.
- Xbox has partnered with Klarna and PayPal to offer payment plans for Xbox purchases and is preparing to release beta codes for Call of Duty: Modern Warfare 4 at the 7th annual C.O.D.E Bowl event.
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Microsoft may be planning to close Compulsion Games, the studio behind South of Midnight, as part of upcoming layoffs. This information was reported by Kotaku. Compulsion Games leadership is reportedly in negotiations with Microsoft regarding the studio’s future, though the details of these discussions remain unknown. Founded in 2009, Compulsion Games was acquired by Microsoft in 2018 as part of an effort to expand Xbox Game Studios. South of Midnight was released on PlayStation 5 and Nintendo Switch on March 31, 2026. The game received the Games for Impact award at The Game Awards 2025 and the Best New Intellectual Property award at the 22nd BAFTA Game Awards. However, the title is described as a commercial failure. Despite this, Compulsion Games showed signs of activity two months ago when talent director Joe Palin announced job openings for programmers on LinkedIn for a new intellectual property. The rumors of layoffs at Xbox intensified last week after Xbox CEO Asha Sharma stated at a Bloomberg Tech conference that business restructuring was necessary due to an unhealthy situation. Subsequently, an email reportedly sent to employees anticipated layoffs, citing a drastic drop in Xbox’s profit margin in recent years.
Potential Fate of Compulsion Games Unclear; Xbox Partners with Klarna and PayPal for Payment Plans
Prior to its acquisition by Microsoft, Compulsion Games released Contrast in 2013 and We Happy Few in 2018. Microsoft has not officially confirmed any plans to close Compulsion Games. In other Xbox news, the company is partnering with Klarna and PayPal to offer payment plans for Xbox purchases. Additionally, the 7th annual C.O.D.E Bowl event on June 20 will offer attendees early access to a beta code for Call of Duty: Modern Warfare 4 during its live broadcast. Xbox Game Studios head Craig Duncan and his chief of staff are also departing the company.
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