(UPD) Xbox may shut down Compulsion Games (South of Midnight) and Arkane Studios could suffer the same fate

, by Thibaut

(UPD) Xbox may shut down Compulsion Games (South of Midnight) and Arkane Studios could suffer the same fate

Updated June 15, 2026, at 7:10 p.m. BST / 2 p.m. ET / 11 a.m. PT

Mike Straw of Insider Gaming reports on Bluesky that Arkane Studios (Dishonored, Deathloop, Marvel's Blade) is also facing closure. Employees there say they fear for their future. These fears are shared by high-ranking officials within these studios.

Original Article

Despite winning an award at The Game Awards last December, South of Midnight was unable to secure the future of its developer. Indeed, Kotaku reports that Xbox is preparing to shut down Compulsion Games.

The studio, also known for Contrast and We Happy Few, currently employs over 90 people. On LinkedIn, the company posted job listings just two months ago to begin work on a new game. While Matt Booty (Head of Content at Xbox) and Asha Sharma (President of Xbox) have consistently highlighted Compulsion Games’ expertise, the economic reality of the gaming division has ultimately proven too much for the studio.

According to the latest rumors within the development teams, Compulsion has reportedly begun "negotiations" with Microsoft. Details of these discussions have not been disclosed, but they will undoubtedly be crucial for the developer’s future.

Finally, insider NateTheHate added that layoffs are coming across the entire Xbox division. He described what’s about to happen as a "bloodbath".

Source: kotaku.com

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