Xbox shake-up grows with reported Compulsion closure and executive exits
Kotaku says Xbox plans to close Compulsion Games as two Xbox Game Studios leaders prepare to leave amid a broader reset.
By James Whitfield · Staff Writer
3 min read
Xbox is facing another round of upheaval, with Kotaku reporting that Microsoft’s gaming division plans to close Compulsion Games, the studio behind South of Midnight. The reported closure would come as Xbox leadership has warned staff of a broader “reset” and possible layoffs, according to The Verge.
Microsoft had not immediately responded to a request for comment from The Verge, the outlet reported. Kotaku’s report did not include a public confirmation from Xbox in the material cited by The Verge.
Compulsion Games is known most recently for South of Midnight, an Xbox title reviewed by The Verge earlier this year. Kotaku reported that Xbox intends to shut the studio as part of wider changes inside the business.
Leadership departures add to the shake-up
The Game Business reported that Craig Duncan, head of Xbox Game Studios, and Louise O’Connor, Xbox Game Studios’ chief of staff, have announced plans to leave. Duncan previously led Rare and moved into the Xbox Game Studios role in October 2024, according to The Verge.
The executive departures land during a period of fast change under Xbox boss Asha Sharma. The Verge reported that Sharma took over in February and has since made several major moves, including lowering the price of Xbox Game Pass and making Gears of War: E-Day and Clockwork Revolution Xbox console exclusives.
Sharma also reorganized Xbox’s platform team in May, The Verge reported. That reshuffle included adding executives she had previously worked with on Microsoft’s CoreAI team.
Memo pointed to pressure on Xbox’s studio system
Sharma sent a memo last week warning of an Xbox “reset” ahead of expected layoffs, according to The Verge. In that memo, Sharma and Xbox chief content officer Matt Booty described strains in the business, including a studio system they said had become “over extended.”
The memo said Xbox is responsible for major franchises with strong demand but has not funded them well enough to “compete and win,” according to the text cited by The Verge. Sharma and Booty also said a steady flow of first-party titles, third-party exclusives and new intellectual property remains critical to Xbox’s plans.
The memo said Xbox needs to reassess the balance between those priorities and its investment plans for the next five years. The Verge reported last week that the changes could include a studio closure or adjustments to the Xbox studio lineup.
Taken together, the reported Compulsion closure, the Duncan and O’Connor departures, and Sharma’s recent reorganizations point to a wider restructuring of Xbox’s first-party games operation. The company has not yet publicly detailed the full scope of the reset described in the memo, according to the reports cited by The Verge.
This story draws on original reporting from The Verge.