South of Midnight Studio Has Been Hit by Mass Layoffs – Rumor

Compulsion Games is seemingly the first one to be hit as part of Xbox's reported plans for major layoffs and studio closures starting soon.

Posted By | On 25th, Jun. 2026

south of midnight

Following recent reports that Xbox’s studios were going to get hit with massive layoffs, a new one by known leaker Rebs Gaming indicates that it has already started. According to a social media post, South of Midnight developer Compulsion Games has been hit with “mass layoffs”. While details about exactly how many employees have been affected are currently unknown, Rebs Gaming’s post includes screenshots of LinkedIn posts by Compulsion Games employees.

Among the employees to have confirmed that they have been laid off are game writer and narrative designer Bijan Stephen, principal 3D environment artist Paulette Richardson, senior character concept artist Shelby Dela Cruz, and dialogue designer Sean Miller.

“After nearly six wonderful years at Compulsion Games, significant professional growth, and having shipped one of my most creatively satisfying titles in my career, I am now #OpenToWork,” wrote Miller. Richardson said, “After five wonderful years at Compulsion, I am now #OpenToWork.”

Recent reports had indicated that, while many Xbox studios are seemingly going to be affected, Compulsion Games was going to be the first to face layoffs.

While many people from across the industry have spoken about these impending layoffs and studio closures, Bloomberg’s Jason Schreier went as far as to say that Microsoft is punishing its employees for following its own previous orders.

“A lot of these studios made plenty of their own mistakes, but in a lot of ways they’re being punished today for following orders,” Schreier said in a video. “For listening to what they were told a few years ago. And that is just a shame, and what is going to happen is pretty brutal. The word bloodbath has been thrown around among people I talk to who know about what’s going to happen. It’s going to be bad.”

“And one of the reasons Xbox studios have struggled to make great games over the past decade is this uncertainty,” he concluded. “It’s really hard to make great art when working under the fear of layoffs and turbulence and cancellations and shutdowns.”

Former PlayStation Studios boss Shawn Layden offered his own opinions on the matter, noting that Xbox’s recent moves have indicated that the company has a “basic misunderstanding” of how the gaming industry works.

“At the risk of sounding like a ‘hater’ (which, I’m really not), the moves evince a basic misunderstanding of how the interactive entertainment world moves. [If you know, you know], which also means if you don’t, you don’t,” wrote Layden. His statement came in response to a LinkedIn post by industry consultant Tadhg Kelly, who had pointed out that many of Xbox’s recent moves have seemed quite contradictory. Among these has been the decision to rebrand back to its previous brand, and an insistence that, despite the potential high price tag of Project Helix, “a claim that hardware can’t be expensive to win.”

In the meantime, Compulsion Games, Double Fine, and Ninja Theory have reportedly begun negotiations with Xbox to try to go independent rather than suffer from studio closures. If these negotiations succeed, however, the studios will still likely have to undergo some form of layoffs.


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