South of Midnight is now self-published by Compulsion Games on Steam

South of Midnight is now listed as directly published by Compulsion Games on Steam. On the game's official page, the Canadian studio appears as both developer and publisher, taking the place of Xbox Game Studios.

The change was recorded on August 11, 2026 and comes just over a month after Compulsion's return to independence. However, it wasn't simply the studio's decision to leave Microsoft to regain greater creative freedom. The transition is part of the broader restructuring initiated by Xbox, which led to layoffs, divestitures, and a reduction in the number of studios directly controlled by the group.

In the document published by Xbox on July 6, CEO Asha Sharma described, without mincing words, an economically struggling division. According to Microsoft, Xbox operated with margins between three and ten times lower than comparable activities in the platform and publishing sector, while Game Pass, the cross-platform strategy, and catalog expansion had not grown at the expected rates. Meanwhile, studios, investments, and costs had increased.

One problem concerned acquisitions. Since 2018, Microsoft had rapidly expanded Xbox Game Studios, but Sharma acknowledged that Xbox cannot and should not own every studio it works with, and, above all, that the company does not necessarily represent the best structure for every type of developer. Microsoft also stated that, in an average year, it lost 64 cents for every dollar invested in the business.

Compulsion found itself directly within this downsizing. Before the July announcement, several reports had indicated the studio as being at risk of closure, with management engaged in negotiating its future. In the end, Microsoft chose a different path: returning Compulsion Games to management, making it independent again, along with Double Fine Productions. As part of the agreement, the studio retained the rights to Contrast, We Happy Few, and South of Midnight, as well as its catalog and the resources needed to work on the next project. Compulsion itself confirmed the new arrangement in its official statement.

It is therefore more accurate to interpret independence as a consequence of Xbox's economic and organizational "reset" and, for Compulsion, as an alternative to possible closure, rather than as a separation born exclusively from creative differences. Microsoft reduced costs and the number of studios under its control; Compulsion, on the other hand, retained its company and intellectual properties.

The new publisher indicated on Steam is one of the first concrete effects of this transition. South of Midnight is no longer just a game developed by Compulsion: at least on Valve's store, the studio itself now directly manages its publication.