A top-rated Xbox Game Pass title is at risk as Microsoft considers closing its studio

Following a Bloomberg report on June 10, it has become clear that Xbox is bracing for substantial workforce reductions this July. This news arrived alongside a sobering internal memo from CEO Asha Sharma and CCO Matt Booty, which outlined a sweeping “Xbox Reset.” Just one week later, the scale of this restructuring is becoming painfully apparent: multiple Xbox-affiliated studios face the threat of closure, and the instability may extend even further.

Among the studios under fire is Compulsion Games. Known for the stylish Contrast and the dystopian RPG We Happy Few, the developer was acquired by Microsoft in 2018. Since that merger, the team has delivered only one title: 2025’s South of Midnight. It stands as a crown jewel of the Xbox Game Pass library, serving as a poignant reminder of how subscription services can spotlight unique projects that might otherwise struggle to find an audience.

South of Midnight is a mesmerizing adventure steeped in the folklore of the Deep South. Players step into the shoes of Hazel, a young woman who discovers her latent talents as a magic-wielding Weaver. When a devastating hurricane shatters her hometown, she embarks on a quest to rescue her mother, who went missing amidst the wreckage.

What follows is an evocative, gothic fable. As Hazel unravels the mystery of her mother’s disappearance, she uncovers the poignant histories of her community—including the tragic past of her own father, who was ostracized following a childhood incident. Even the game’s more monstrous entities, such as a predatory alligator, are given unexpected depth, transforming them into complex, sympathetic figures.

The world is populated by a vibrant cast, ranging from legendary blues musicians to giant, loquacious catfish, all heavily inspired by Southern mythology. The inclusion of figures like the local boogeyman, “Huggin’ Molly,” grounds the narrative in a rich cultural tapestry. The game’s commitment to world-building, paired with its distinct stop-motion animation aesthetic and soulful soundtrack, renders it a truly singular experience.

While South of Midnight excels in atmosphere, its gameplay is a bit more uneven. The melee combat is functional but rarely feels innovative; while an evolving magical toolkit makes Hazel feel remarkably powerful, standard encounters can feel somewhat repetitive. Fortunately, these skirmishes can often be bypassed, allowing players to focus on the game’s stellar narrative beats.

In many ways, the fate of South of Midnight reflects the current identity crisis at Xbox—caught between its role as a cross-platform publisher and its desire to bolster the appeal of its own hardware. It is difficult to imagine that South of Midnight alone drove significant console sales in 2025, yet it likely would have found a much larger, more appreciative audience had it been a multi-console release from day one.

South of Midnight has garnered significant critical acclaim, securing several prestigious accolades, including a Peabody Award and a BAFTA win—notably surpassing even the industry-darling Clair Obscur: Expedition 33.

These awards are particularly relevant given that management explicitly championed them. In an April interview with Game File, Matt Booty cited the game’s critical success as a “validation of the storytelling capability of games,” framing such recognition as a key organizational goal. He expressed a desire for Xbox to be a hub where new intellectual properties can flourish, yet the recent corporate trajectory suggests a stark disconnect between these stated values and the company’s current actions. South of Midnight is currently available on Xbox Game Pass; it is well worth your time.

Source: Polygon