Compulsion Games is seeking partners after Xbox spin off
Compulsion Games, the studio behind South of Midnight, is making a public appeal in search of opportunities to collaborate with studios following its spinoff from Xbox last week.
In an open letter shared via social media, the studio expressed its desire to collaborate with studios across “the games and entertainment industry,” inviting partners to “leverage the talent and creativity” of the team.
Compulsion leads the open letter mention South of Midnight’s accolades, which received a BAFTA Award, a Peabody Award, seven Canadian Game Awards, and recognized 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,” the letter reads. “We are excited to support the development of memorable experiences that engage and entertain players around the world.”
Compulsion was one of the four studios jettisoned from the Xbox Game Studios ecosystem last week, returning to independence with full ownership of their respective IP catalogs. Psychonauts maker Double Fine received the same treatment, while Ninja Theory and Undead Labs agreed to join new ownership with the financing required to bring Senua and State of Decay 3 to market, respectively. Meanwhile, Arkane Lyon, currently working on Blade, began a consultation process that Microsoft said will allow the studio to “review potential strategic options.”
The studio spin offs and evaluations came as part of what Microsoft described as the “most significant restructure in Xbox history.” The company laid off 1,600 workers on July 6, while another 1,600 job cuts will be taking place by the end of the current fiscal year. This marked the fifth major round of layoffs announced by Microsoft since the company acquired Activision Blizzard in 2023 for almost $70 billion.
Amidst the layoffs and company restructure, Xbox CEO Asha Sharma said that turning Xbox around will take time, and that the company’s core “has to be healthy.” Days after announcing the 3,200 layoffs, Sharma joined the Federal Reserve advisory task force, where she will specifically analyze “the economic impact of new general-purpose technologies, including artificial intelligence.”
While Xbox didn’t publicly list the specific numbers of job cuts across its studios, we now know that Xbox laid off 379 ZeniMax workers in Maryland—a figure that includes 213 employees at ZeniMax Online Studios—as well as at least 52 workers at Obsidian.
