Xbox may be closing Compulsion Games, the developer of South of Midnight, according to a Kotaku report published on June 15, 2026.
The report follows a memo from Xbox boss Asha Sharma and CCO Matt Booty that warned of an upcoming “reset” and hinted at over‑extension in the studio system. Sharma, who took the helm in February, has already cut Game Pass pricing and shifted several titles to Xbox‑first releases. The memo does not confirm a shutdown, but it outlines the challenges that could lead to studio closures.
If true, the move would trim Xbox’s portfolio and signal a more conservative approach to its studio investments. It also raises questions about the future of smaller, narrative‑driven games that rely on Microsoft’s backing.
For now, the closure remains unverified beyond the Kotaku report, and Xbox has not issued an official statement.