Microsoft has decided to shut down South of Midnight game maker Compulsion Games, laying off 90 people, GamesBeat has learned.
The Xbox-owned Montreal game studio was known for crafting stylized, narrative-driven action adventure games like South of Midnight, We Happy Few and Contrast. Update: It’s possible that negotiations are continuing between Microsoft and the studio.
The studio is the first to be shut down under the “reset” planned by Asha Sharma, the new CEO of Xbox who has been in the top job for a little over 100 days. Last week, Bloomberg reported that Xbox planned layoffs because profit margins had fallen to 3%. But the cutbacks were expected to take place in July. Instead, the ax has fallen sooner. Sharma said in a public appearance at a Fortune event that a “reset” was in the works, but she did not confirm Bloomberg’s details of cutbacks. Both Sharma and leader Matt Booty said Xbox had become overextended.
While it may not be surprising that a smaller studio like Compulsion is facing closure at Microsoft, the news is sure to disappoint gamers who are big fans of Compulsion’s games, which were off the beaten path.
There are likely to be a number of other games and staff cut from other studios that Microsoft acquired over the years, based on the story from Bloomberg last week.
In a talk with Fortune last week, Sharma noted that Xbox needed to “reset” its business, and some are now interpreting that as pending layoffs. Sharma has already decided to lower the price of Xbox Game Pass while also removing Call of Duty releases from day one on the service. And Sharma also moved to appease angry gamers by making Gears of War: E-Day and Clockwork Revolution into Xbox exclusives — a move that means those games will no longer reap extra sales from appearing on Sony’s PlayStation consoles.
Sharma and Booty are evidently turning to layoffs, but they may not achieve much. Last year, Xbox laid off hundreds of people from Candy Crush Saga mobile game maker King, it canceled the Perfect Dark reboot, and closed the studio making it, The Initiative. It also canceled an MMO at ZeniMax and canceled Rare’s Everwild. Each cancellation came with layoffs, and this comes after Xbox layoffs in each of the previous two years as well.
We have reached out for comment on the expected layoffs.