Xbox first-party studio Compulsion Games has officially started layoffs. Acquired in 2018 alongside Undead Labs, Ninja Theory and Playground Games, the studio is laying off staff following reports of an expected studio closure. 

Since its acquisition in 2018, Compulsion has released one title under its Xbox ownership: South of Midnight. Released to decent reviews, the award-winning action-adventure game did not sell particularly well, although this is expected considering its Game Pass launch. 

Across LinkedIn, numerous Compulsion Games staff have confirmed that layoffs have started. The exact number of employees that have been cut from the studio is currently unknown. 

At the time of writing, layoffs are still ongoing, but a number of staff are already looking for new roles. Affected developers include dialogue director Sean Miller, principal 3D environment artist Paulette Richardson, narrative designer Bijan Stephen, senior character concept artist Shelby Dela Cruz, and more. 

While layoffs are commencing, it does appear that Compulsion Games is not closing down, despite prior reports. Although, it’s not known if Xbox is planning to sell off the studio or allow it to move back to independence like it did for Spyro developer Toys for Bob last year. 

Compulsion Games is just one of Xbox’s studios reportedly facing layoffs or studio closures. Prior reports have claimed that Double Fine and Ninja Theory are at risk of closure. Another report claimed that Arkane Lyon, the studio working on Marvel’s Blade, is also at risk, although that has not been confirmed. 

This round of layoffs comes after a disastrous period last year which saw over 1,000 employees cut from Microsoft. These layoffs saw the closure of The Initiative and the cancellation of Perfect Dark, the cancellation of Rare’s Everwild, and the cancellation of Zenimax Online’s next MMO Project Blackbird. The latter cancellation resulted in the formation of new studio Sackbird Studios outside of the Xbox umbrella. 

While layoffs commence, reports have claimed that Xbox is planning to double-down on its flagship IP. This involves Halo, which is returning with Campaign Evolved next month, Gears of War which returns with E-Day in October, Forza, Elder Scrolls and Fallout.