According to a new report from Bloomberg journalist Jason Schreier, three Xbox game development studios could be closed down or become independent companies. This is the latest update on the situation.
Compulsion Games (known for We Happy Few and South of Midnight), Double Fine (the creators of Psychonauts), and Ninja Theory (famous for Hellblade) are reportedly in talks to become independent studios. According to sources at Bloomberg, this move is an attempt to avoid being shut down.
Here’s the latest update (as of Monday, June 15th, 2026 at 6:30 PM): Kotaku has recently published new information regarding this ongoing story.
So, I’m hearing from someone inside Compulsion Games that they’re talking to Microsoft about what’s going to happen with the studio. Apparently, it’s more than just a casual chat – like, serious negotiations are happening. But nobody’s saying exactly what they’re negotiating about yet, which is kinda frustrating as a fan!
The talks might lead to the studio becoming independent again, but we’ll have to see what happens next to confirm.
Man, this weekend’s been crazy! There have been a ton of rumors flying around that Microsoft might be closing some of their game studios. Apparently, the new folks in charge are dealing with a really tough situation and trying to figure things out.
Rumors of layoffs have been circulating online, and Kotaku now reports that Compulsion Games, the studio behind South of Midnight, is likely to be one of the first affected.
It’s unclear exactly how many jobs have been lost, but LinkedIn shows around 90 people were employed at the studio, which is based in Montreal. Microsoft bought the studio in 2018, just before their game, We Happy Few, came out.
Several people who work at the studio, including writer Zaire Lanier from the game South of Midnight, have posted on social media saying they are looking for new jobs. However, the studio hasn’t made any official announcement about this as of yet.
Xbox Game Studios head Craig Duncan has stepped down from his position after just under two years, according to reports from The Game Business. Louise O’Connor, who served as Chief of Staff, has also departed the company.
During an interview this weekend, Microsoft CEO Satya Nadella explained that the Xbox division needs to be self-sufficient after being supported by company funds for the past 25 years. He also pointed out that more money is currently being made from Xbox games on YouTube than through Microsoft itself.
South of Midnight has received several accolades, notably winning the Games for Impact award at The Game Awards last year. When it came out on PlayStation 5 earlier in 2024, we praised it as a beautifully minimalist game.
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2026-06-15 23:37