Xbox Plans to Shut Down Compulsion Games After Reset Memo
Xbox plans to shut down compulsion games, the studio behind South of Midnight, according to a report. The move lands after Asha Sharma warned of an Xbox reset last week, and it follows a run of leadership changes that has put the company’s studio strategy under strain.
Asha Sharma’s reset memo
Sharma and chief content officer Matt Booty told staff, in a memo last week, that Xbox has “We are the fortunate stewards of industry-defining franchises that have enormous potential and player demand, but we have not adequately funded them to compete and win.” They added, “At the same time, as we saw this past weekend at Showcase, a reliable pipeline of first- and third-party exclusives and new IP are critical to our success.”
They also wrote, “We need to reassess the balance between these and our investment priorities for the next 5 years.” That language points to a business reset, not a routine reshuffle, and the reported shutdown of Compulsion Games is the clearest sign yet that the review is reaching studio level.
Craig Duncan leaves Xbox
Craig Duncan and Louise O'Connor announced that they will be leaving, adding another change inside Xbox Game Studios as the company moves through the reset. Duncan took over as head of Xbox Game Studios in October 2024 after formerly heading Rare, which makes his departure a short tenure rather than a long handoff.
Sharma took over in February and made changes including cutting the price of Xbox Game Pass and making Gears of War: E-Day and Clockwork Revolution Xbox console exclusives. She then reorganized the Xbox platform team in May and brought in executives she had formerly worked with on Microsoft’s CoreAI team. Those moves show a leadership team already reworking the business before the latest studio report surfaced.
Compulsion Games and Xbox lineup
Compulsion Games has been known as the studio behind South of Midnight, so a shutdown would not just trim headcount; it would remove a studio with a defined project history from Xbox’s lineup. Sharma and Booty said a reliable pipeline of first- and third-party exclusives and new IP is critical to Xbox success, which leaves little room for a studio closure to be treated as a side note.
Xbox has not yet replied to a request for comment, and that leaves the reported shutdown, the departures of Duncan and O'Connor, and the broader reset memo as the main facts to watch. For employees and players, the next signal will come from whether Xbox pares back more studio investment or redraws the lineup again around fewer bets that can ship faster.
