Xbox is reportedly considering closing South of Midnight studio, Compulsion Games, with Double Fine and Ninja Theory also allegedly at risk

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GamesIndustry.biz · 2 min read · top_stories

Microsoft is reportedly considering closing Compulsion Games, developer of South of Midnight and We Happy Few, with studio leadership in negotiations with Microsoft over its fate. Bloomberg reports several other Xbox studios, including Double Fine and Ninja Theory, face similar closure talks as management attempts to spin them off. Xbox CEO Asha Sharma noted the division has spent over $20 billion in five years while revenue dropped roughly $500 million annually. Xbox Games Studios boss Craig Duncan and his chief of staff departed this week.

Mentioned entities

Activision Blizzard Asha Sharma BAFTA Awards 2026 Compulsion Games Craig Duncan Double Fine Gayming Awards Hellblade Louise O'Connor Microsoft Nightdive Studios Ninja Theory Peabody Award Psychonauts South of Midnight Tim Schafer We Happy Few Xbox Xbox Game Studios

Appeared in 2026-06-16.