Compulsion Games has officially completed its management buyout from Xbox, making the South of Midnight developer an independent studio once again.

The Montreal-based developer first announced plans to separate from Xbox in July 2026 following Microsoft’s major restructuring of its gaming division.

That process has now been completed, with Compulsion Games CEO Guillaume Provost confirming that the studio is independent and has regained ownership of its original intellectual properties.

Compulsion Games Regains Ownership of Its IP

Speaking to GamesBeat, Provost confirmed that Compulsion Games has successfully completed a management buyout and separated from Xbox.

Perhaps most importantly for the studio’s future, Compulsion has also regained ownership of its IP and is in the process of having publishing rights transferred back to the company.

“I can confirm we have regained ownership of our IP, and that the publishing rights are transferring back to Compulsion.”

Provost explained that there is still a transition period involving different platform holders, but purchasing the studio’s existing games will now directly support Compulsion following the change in ownership.

The developer’s portfolio includes South of Midnight, We Happy Few, and Contrast, with the studio becoming particularly well known for creating visually distinctive games with unusual settings and storytelling.

Compulsion was originally acquired by Microsoft in 2018, becoming part of Xbox Game Studios before releasing South of Midnight in 2025.

The terms and financial details surrounding the management buyout haven’t been disclosed.

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Compulsion Team Wanted to Remain Together

According to Provost, keeping the existing development team together was one of the biggest motivations behind the decision to pursue independence.

He asked employees whether they wanted to remain together following the restructuring, and their answer was apparently rather emphatic.

“The team told me we would rather eat rocks and drink gasoline rather than be split up.”

Provost said he pursued the deal “for the team first and foremost.”

Compulsion Games was among the studios affected by Xbox’s major restructuring announced in July.

The changes immediately affected around 1,600 jobs, with another 1,600 positions expected to be eliminated before the end of the year.

It’s still unclear exactly where all of those additional cuts will occur.

For Compulsion Games, however, the management buyout means the studio can now move forward outside Microsoft’s first-party ecosystem while maintaining its team and creative properties.

The biggest question is what the newly independent studio decides to build next.

After South of Midnight introduced a striking Southern Gothic world and helped establish Compulsion’s identity within Xbox’s portfolio, its first completely independent project could provide an interesting glimpse at the direction the studio wants to take in this new chapter.

Are you looking forward to seeing what Compulsion Games creates as an independent developer? Let us know in the comments below.