Amid reports Xbox is preparing for significant layoffs, a wave of staff at South of Midnight developer Compulsion Games announce their departure

Multiple developers at Compulsion Games, the Microsoft-owned studio behind South of Midnight and We Happy Few, have posted “open to work” messages on LinkedIn this week, indicating their departures. At least a dozen staff members, including principal-level designers, have left the studio, with some describing their exits as unexpected.

The departures align with reports that Xbox is undertaking significant restructuring under new CEO Asha Sharma, which is expected to include multiple studio closures and potential spin-offs. Compulsion Games’ fate remains uncertain, with speculation ranging from full studio closure to independent acquisition or management buyout.

While the sudden emergence of “open to work” posts typically signals imminent layoffs in the gaming industry, Bloomberg reporter Jason Schreier clarified that these appear to be voluntary departures rather than formal layoff announcements. However, the distinction between voluntary exits and layoffs is arguably semantic, given the apparent instability at the studio and broader industry uncertainty.

Compulsion Games, an award-winning developer, has been instrumental in Xbox’s portfolio. The studio’s recent work on South of Midnight represents a significant project that could be impacted by the ongoing uncertainty. The departures constitute the first visible manifestation of the broader Xbox restructuring that industry observers anticipated throughout June 2026.

Amid reports Xbox is preparing for significant layoffs, a wave of staff at South of Midnight developer Compulsion Games announce their departure

Sources