Compulsion Games became independent after splitting from Xbox during mass layoffs in early August 2026, ending its period as an Xbox-owned studio [1, 2, 3]. Unlike some other former Xbox studios, Compulsion was not immediately acquired by another company [2, 3].
The studio currently employs about 112 people and retains the rights to its key franchises, including South of Midnight, We Happy Few, and Contrast [1, 3]. South of Midnight, released in 2025, won critical acclaim, including a BAFTA Award and seven Canadian Game Awards [1, 3].
Compulsion announced it is actively seeking opportunities to collaborate with other game and entertainment industry studios, either in co-development or in support roles. The studio said, "With Compulsion Games returning to its roots as an independent developer, we are expanding opportunities to collaborate with studios across the games and entertainment industry" [1].
They added, "We invite partners to leverage the talent and creativity of the award-winning team behind South of Midnight" [3].
The current market environment poses challenges for new game funding as publishers prioritize investments in generative AI and stock buybacks, creating a more difficult context for independent developers seeking financial backing [3].
Compulsion Games aims to build on its independence and industry relationships to pursue new projects and partnerships in the near term [1, 2, 3].
