Compulsion Games, the Montreal-based developer behind South of Midnight, has officially completed its process of separating from Microsoft to become an independent studio again, according to CEO Guillaume Provost. Originally acquired by Xbox in 2018, the studio faced restructuring talks and potential closure before leadership negotiated a separation that returned IP ownership and publishing rights back to the company.
Compulsion Games Regains Independence Following Xbox Cost-Cutting
The path to independence for Compulsion Games followed a turbulent wave of cost-cutting measures announced by Xbox earlier this year. According to reporting by Mike Straw at Insider Gaming, sources indicated that Microsoft had planned to close the studio, while Kotaku journalists Ethan Gach and Rebekah Valentine reported that studio leadership entered into high-stakes negotiations over the developer’s ultimate fate. Amid mounting internal anxiety following leadership shifts at Xbox, CEO Guillaume Provost chose to orchestrate a separation to preserve the team.
Speaking in an interview with GamesBeat, Provost detailed the complex legal hurdles the studio navigated to reclaim its freedom. “We have completed the separation process to become independent again,” Provost stated, confirming that intellectual property and publishing rights now rest entirely with Compulsion Games. When asked why the studio fought to stay together as an independent entity rather than dissolve, Provost revealed the team’s unwavering dedication: “I made this deal for the team first. I asked the team, ‘Do you want to stay together?’ The team said we’d rather eat rocks and drink gasoline than be separated.”
Critical Acclaim Versus Commercial Realities for South of Midnight
The studio’s flagship title, South of Midnight, launched in April 2025 to positive reviews from critics and even secured a Peabody Award in the Immersive and Interactive category. Despite the critical praise and creative success, the game failed to meet internal commercial expectations set by Xbox. That performance gap catalyzed the broader corporate restructuring that ultimately put the roughly 90-to-100-person studio at risk of closure before the separation was finalized.
What Lies Ahead for Compulsion Games
Now operating outside the Xbox corporate structure once more, Compulsion Games is deliberately taking a measured approach to its future. Provost noted that the studio does not yet have a finalized blueprint or rigid outline for its next video game project. Instead, leadership is focusing on internal alignment and team well-being. “We start to understand what the management team wants to do and build,” Provost explained to GamesBeat, adding that the studio will “take steps slowly” while reconnecting with all staff members.
Frequently Asked Questions
Why did Compulsion Games leave Xbox?
Compulsion Games regained its independence through a separation following extensive cost-cutting measures and restructuring at Xbox, which initially put the studio at risk of closure.
Who owns the intellectual property for South of Midnight now?
According to CEO Guillaume Provost, Compulsion Games now retains full ownership of its intellectual property and has reclaimed all publishing rights.
How many people work at Compulsion Games?
The Montreal-based developer currently employs approximately 90 to 100 people.
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