Compulsion Games, the Montreal studio behind South of Midnight and We Happy Few, has publicly announced it is looking for work. In a LinkedIn post, the newly independent developer said it is opening up to collaborations with other studios, a message that reads less like a company teasing its next big project and more like one making sure it can keep the lights on.
"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," the studio wrote. It invited partners to "leverage the talent and creativity of the award-winning team behind South of Midnight," a game it noted won a BAFTA Award, seven Canadian Game Awards, and spots on multiple 2025 best-of lists.
From Xbox studio to independent again
The post comes just a week after Compulsion regained its independence from Microsoft. As part of Xbox's mass layoffs, which the sources say will ultimately cost 3,200 jobs, the company spun off both Compulsion and Psychonauts developer Double Fine. Two other studios, Hellblade maker Ninja Theory and State of Decay studio Undead Labs, are moving to undisclosed new ownership, while Dishonored and Deathloop developer Arkane is reportedly negotiating its own split.
As Eurogamer notes, Compulsion held onto the brand rights to South of Midnight, We Happy Few, and Contrast in the separation. What the roughly 112-person team has been working on since South of Midnight shipped in 2025 is unclear, since that game got no add-ons or expansions.
Why pitch for support work
Rock Paper Shotgun frames the announcement as a practical move. Unlike Ninja Theory and Undead Labs, neither Compulsion nor Double Fine landed directly with a new owner, meaning both likely need short-term funding beyond whatever exit money Microsoft provided. Both studios had also released games relatively recently before being cut loose, leaving them between major projects.
Courting co-development or support gigs, then, is a way to keep staff employed while a new original game gets spun up. Given Compulsion's reputation for storytelling and distinctive art, RPS suggested narrative-heavy or stylistically bold projects would be a natural fit.
The outlets are also candid about the harder truth. As Kotaku puts it, independence is "no guarantee of survival." Funding for new projects has gotten scarce, with larger publishers steering capital toward generative AI or stock buybacks, and the deals that do exist often structured so the publisher recoups its investment before the developer sees any profit. Eurogamer raises the blunt question of which publisher will take a chance on the studio in a cost-cutting market. In the meantime, Compulsion says it is "excited to support the development of memorable experiences."
What it means for players
Don't expect a follow-up to South of Midnight anytime soon. For now, Compulsion is selling its skills rather than announcing a new game, and the same uncertainty hangs over Double Fine, whose recent releases Keeper and Kiln leave it in a similar spot. If you're tracking what these teams do next, the near-term reality is that both studios are hunting for stability first, with their own original projects likely a longer wait than fans of South of Midnight or Psychonauts would like.
