Just days after Compulsion Games bought back its independence from Microsoft as part of Xbox’s mass layoffs, the studio – facing the realities of going it alone – is already on the hunt for new work opportunities.
The South of Midnight and We Happy Few developer has announced it’s now open to new “opportunities to collaborate”, and is looking to “support the development of memorable projects” being made elsewhere – suggesting it’s not necessarily preoccupied making a game of its own.
“With Compulsion Games returning to its roots as an independent developer, we are expanding opportunities to collaborate with studios across the games and entertainment industry,” the studio wrote on LinkedIn. “We invite partners to leverage the talent and creativity of the award-winning team behind South of Midnight, a game that was honoured with a BAFTA Award, seven Canadian Game Awards, and recognised on multiple ‘Best Games of 2025’ lists.
“With deep experience in creating acclaimed original IP, we bring our artistry, technical expertise and collaborative approach to every project. We are excited to support the development of memorable experiences that engage and entertain players around the world.”
As part of its split from Xbox, Compulsion Games announced it would retain the brand rights to the games it has so far created: South of Midnight, We Happy Few, and Contrast. What it’s been working on since 2025’s South of Midnight, however, we don’t know. That game had no add-ons or expansions so the approximately 112-person team must have been occupied somehow. Supporting other Xbox studios, perhaps?
Pitching for work is the reality of being an independent studio, of course, and there’s a chance Compulsion Games is creating something of its own in tandem – something it can pitch to publishers for funding. But the bigger question: in a cost-cutting and money-watching market such as the one we’re in, which publisher will take a chance on it?
The other Xbox studio to regain its independence last week was well-loved Psychonauts developer Double Fine, another team between big projects. The delectable lighthouse and bird adventure Keeper came out in October, followed by a smaller pottery project called Kiln this spring. Again, Double Fine retains ownership of its franchises in the Xbox split, but what it’s planning to make next is a mystery.
Meanwhile, acclaimed Dishonored and Deathloop studio Arkane is negotiating a split from Xbox as well, and Hellblade developer Ninja Theory and State of Decay studio Undead Labs are under undisclosed new ownership.
Microsoft’s Xbox cuts have resulted in 1,600 immediate layoffs, with a further 1,600 to occur between now and next summer. The cuts have impacted every area of the Xbox division, even sacred franchises such as The Elder Scrolls.
