Compulsion Games, the studio behind last year's South of Midnight, is reportedly being shut down. The head of Xbox Game Studios quit the same week.
Xbox Game Studios head Craig Duncan and chief of staff Louise O'Connor departed the company this week. Reports followed that Compulsion Games is being wound down, though Microsoft has not officially confirmed the closure. Studio leadership is said to be in negotiations over the team's fate, and at least one employee has already posted publicly that they're looking for work. Both developments follow a memo from new Xbox head Asha Sharma, who replaced longtime boss Phil Spencer in February, warning staff of a company "reset" and acknowledging that the division had "over extended" with its studio system.
Xbox has struggled for years to maintain a consistent release schedule, and losing a studio that produced a well-reviewed game last year makes that harder, not easier. More layoffs are expected, per Bloomberg, which means the development bench is likely to get thinner before it gets deeper.
Meanwhile, Xbox is still teasing "Project Helix," its next console, and sending branded merch to influencers. Hyping the box while shrinking the teams who make the games is a tension the new leadership hasn't explained.