One week after Microsoft and Xbox began a large series of "reset" 3,200 layoffs across the gaming brand that saw 1,600 devs let go immediately and four studios split from the company, Compulsion Games — one of the teams divested — has now signaled how it intends to move forward.

In a new post on LinkedIn, the studio behind the action-adventure games We Happy Few and 2025's award-winning Xbox title South of Midnight reaffirmed that it will continue on as an independent developer, while also announcing that it's "expanding opportunities to collaborate with studios across the games and entertainment industry."

"With Compulsion Games returning to its roots as an independent developer, we are expanding opportunities to collaborate with studios across the games and entertainment industry," reads Compulsion's statement.

"We invite partners to leverage the talent and creativity of the award-winning team behind South of Midnight, a game that was honored with a BAFTA Award, a Peabody Award, seven Canadian Game Awards, and recognized on multiple ‘Best Games of 2025’ lists," it continued.

Though it wasn't a massive success for Microsoft and Xbox commercially, South of Midnight reviewed quite well with critics and players, and took home several major awards as Compulsion highlights here. We gave it a 4/5 score in our own review, stating that it "delivers a story filled with trauma and beauty, with a gorgeous world that doesn't overstay its welcome."

Notably, in the past, Compulsion contributed to the development of games like Darksiders and Dungeons & Dragons: Daggerdale in the leadup to its debut puzzle-platform title Contrast. Now, the developer hopes to work with other studios once again.

"With deep experience in creating acclaimed original IP, we bring our artistry, technical expertise and collaborative approach to every project," the announcement adds. "We are excited to support the development of memorable experiences that engage and entertain players around the world."

The layoffs and divestment of Compulsion Games from Xbox came as part of a wider effort from Microsoft to reorganize its gaming business after it "overextended," with Xbox's new CEO Asha Sharma pushing for the brand to "move faster" with and focus on its largest properties such as Fallout, The Elder Scrolls, and Halo.

Games like South of Midnight that have less selling power than huge established franchises aren't going to mesh well with that strategy, which is ultimately why Microsoft and Xbox cut Compulsion loose. That departure is frustrating to see for many — myself included — as we know it came with layoffs...but, at the very least, I'm glad that the studio will live on.

As for what its developers will end up working on, either on their own or with other teams across the industry? Only time will tell. Whatever's next for Compulsion Games, though, I hope that it will be a project its workers are passionate about, and that it will succeed well enough to give the studio stability in what's become an extremely volatile time for game development.

What kind of game would you like to see Compulsion Games make next? What studio(s) should is partner and collaborate with? Let me know what you think in the comments.

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One of the biggest and most upsetting recent developments in the gaming industry was the sudden and shocking end of Destiny 2, with developer Bungie announcing its conclusion in May before delivering one last content update, Monument of Triumph, in early June. Despite players pushing to keep the series alive, publisher Sony ultimately ended support for Destiny 2 (though it remains playable) and laid off "most of the Destiny team" soon after.

The downfall of a franchise as massive and prominent as Destiny — reportedly caused by poor leadership and financial troubles — was a bombshell to many, including Rebecca Ford, the creative director of Warframe. Digital Extremes' 2013 live-service sci-fi action RPG, one of Destiny 2's biggest rivals, has now outlasted it...but Ford isn't celebrating.

On the contrary, she views the end of Destiny 2, and the way it ended, to be deeply concerning: "It's horrible news, because it shows that even if you care so much, the business side of this industry always gets the last remark," she told GamesRadar+ during an interview at TennoCon 2026.

"Those are the types of stories and experiences that, when you're in a position where you have your own game, your own IP, and you work as hard as you do on it...that's not the first time it's happened, and it'll happen again, where the business aspect of the video game economy makes the decision for you, and it is existentially threatening at every level, because the idea that we aren't in charge of our own goodbye is something I wake up thinking about every single day," she continued.

While this isn't something that private, independent studios have to worry about, these kinds of shutdowns, layoffs, and closures are undoubtedly things that developers operating under a publisher's wing have come to fear more and more in recent years.

One only has to look at last week's events at Xbox for a glaring example of why; Microsoft's gaming brand began a series of 3,200 ongoing layoffs, with 1,600 workers immediately let go and another 1,600 set to be cut over the course of 12 months. Four studios are being divested from Xbox Game Studios as well, and that number could rise to five depending on how negotiations about Arkane Lyon with the French government shake out.

As a result of what Xbox calls a "reset" for an operation that's "not healthy," over half of DOOM dev id Software and over 200 devs at The Elder Scrolls Online maker ZeniMax Online Studios have been discharged, with numerous other teams across Xbox also affected. Bethesda workers fear The Elder Scrolls 6 will be delayed and that Fallout 76 support may not continue, while its union fights back with a Save Our Devs protest this week.

The cuts at Xbox and Bungie are merely the latest in a devastating series of industry layoffs that have continued to pile up since 2022, initiated by overinvestment into gaming during the pandemic and worsened by the impact of tariffs, the hardware crisis, and other socioeconomic factors.

In an era where publishers dismissing thousands of devs and canceling or shutting down projects has become disturbingly routine, Ford is right to see what's happened with Destiny and Bungie as a grim reminder of the current state of the industry. We can only hope that a light at the end of the tunnel isn't too far away.

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