Xbox Plans to Close Compulsion Games Studio
Xbox will shut down Compulsion Games, the studio behind South of Midnight. The move follows a memo from Xbox boss Asha Sharma warning of a business reset and expected layoffs.
The VergeXbox plans to shut down Compulsion Games, the studio behind South of Midnight, Kotaku reported on June 15. Xbox boss Asha Sharma sent a memo last week warning of an Xbox reset ahead of expected layoffs. Sharma took over as Xbox boss in February 2026.
Since taking over, Sharma has cut the price of Xbox Game Pass and made Gears of War: E-Day and Clockwork Revolution Xbox console exclusives. In the reset memo, Sharma and chief content officer Matt Booty stated that Xbox has over extended with its studio system.
The memo said Xbox is the steward of industry-defining franchises that have enormous potential and player demand, but has not adequately funded them to compete and win.
It added that a reliable pipeline of first- and third-party exclusives and new IP are critical to success and that Xbox needs to reassess the balance between these and its investment priorities for the next five years. Craig Duncan, head of Xbox Game Studios, and Louise O’Connor, Xbox Game Studios chief of staff, announced they will be leaving, The Game Business reported.
Duncan took over the role in October 2024 after heading up Rare.
In May 2026, Sharma reorganized the Xbox platform team, including bringing in some executives she had formerly worked with on Microsoft’s CoreAI team. Xbox did not immediately reply to a request for comment.
