Former South of Midnight director David Sears has admitted that he probably would not have funded the game if he had been in charge of Xbox. He also argued that Microsoft's approach to financing smaller projects was ultimately unsustainable, so even though he appreciated the company’s support for creative games like South of Midnight, he expressed his belief that the financial consequences of this strategy were inevitable.

South of Midnight was developed by Compulsion Games, and it is an action-adventure title that was originally released in April 2025 for Xbox Series X/S and PC. In March 2026, the game also arrived on PlayStation 5 and Nintendo Switch 2. The story follows Hazel, a young woman exploring a Southern Gothic world inspired by American folklore. In any case, South of Midnight attracted more than one million players within its first three weeks, although it is also true that the figure included Xbox Game Pass subscribers as well. When Microsoft announced a major restructuring in July 2026, Compulsion Games was among the developers affected by the layoffs and studio departures, but instead of shutting the studio down, Microsoft allowed it to become independent again.

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During an interview with MinnMax , former South of Midnight director David Sears discussed Microsoft's decision to fund smaller, unconventional games, admitting that he would probably not have approved the project himself. However, he also clarified that he genuinely wanted to make South of Midnight and deeply appreciated the opportunity that Microsoft had given the studio.

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