Compulsion Games, the Canadian game developer behind South of Midnight and We Happy Few, has officially parted ways with Microsoft. After Microsoft confirmed that Compulsion was one of five Xbox studios it was divesting of, Compulsion boss Guillaume Provost has now confirmed it's a done deal.

This was hinted at recently when the Steam page for South of Midnight listed Compulsion as the developer and publisher. Now, it's official, with Provost confirming to Games Beat that its management team acquired the studio and staff, while Microsoft transferred the developer's IP back to the studio.

What this means in practice is that if you buy a Steam copy of South of Midnight--one of 2025's best games--the money goes to Compulsion, not Xbox. Provost said it will take some time before the change gets implemented on other storefronts.

Provost did not disclose the specific terms of the deal, but he said staffers at Compulsion really wanted to stick together.

“I did this deal for the team first and foremost. I asked the team, ‘Do you want to stay together?’ The team told me we would rather eat rocks and drink gasoline rather than be split up,” Provost said.

Some Compulsion developers opted to leave the studio after Provost warned staff that the company was at risk of closure. However, Provost said the majority of senior staff stayed on.

Provost went on to say that part of Compulsion's team is now working on an unannounced game that was already in the works before it split off from Xbox.

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