According to reports, Microsoft is planning to shut down Compulsion Games, the studio behind both South of Midnight and We Happy Few. The studio was founded in 2009, releasing their debut game Contrast in 2013, before going on to be acquired by Microsoft in 2018. Kotaku reports that this will mean more than 90 staff at the Canadian developer would be affected, with this news coming shortly after the developer began Job advertising for a new IP, as well as the news that Xbox Game Studios Craig Duncan and Chief of Staff Louise O’Connor both departed from Microsoft after decades with the company.
Last week, the new boss at Xbox, Asha Sharma, announced there would be a reset coming to the company, which is usually code that a company is planning layoffs or studio closures. Compulsion Games was probably an easy choice, despite winning a Peabody for South of Midnight, given that one analyst told IGN “the studios most exposed are brilliant for prestige and rotten for the spreadsheet.” Microsoft has also stated they are speeding up the development of several projects, including The Elder Scrolls VI, a new Fallout game, and a new Halo game. There are also rumors swirling about that Microsoft might be open to selling the Xbox brand entirely, or at least spinning off its gaming division.
In a devastating memo from Asha Sharma, it was revealed that Microsoft’s gaming business only has a 3% accountability Margin, which most assume to mean gross profit margin. This is down year over year, with the memo going on to state:
Excluding Activision Blizzard King, over the past five years, we have spent over $20 billion on ongoing investments in our content, platform, and hardware subsidy, but our annual revenue has declined nearly half a billion during that time. Going forward, this cannot continue.
Microsoft CEO Satya Nadella followed up on this, stating:
No one can accuse Microsoft of not having invested for the last 25 years. Now, we have to turn this into a sustainable business that delivers what is fundamentally one of the best sources of entertainment, still.
South of Midnight was an action platforming title that saw players traveling through the swamplands of Mississippi as the protagonist, Hazel, attempts to save her mom following a flood. The story draws heavily on southern mysticism and folklore. It was originally released as an Xbox Exclusive, alongside a PC version, but it is now available on PlayStation 5 and Nintendo Switch 2 as well. When it was released, we reviewed South of Midnight and gave it a 7.0, which you can read here.
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