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Studio IndependenceIndustry ShiftAug 15, 2026, 11:20 PM· 3 min read· in gaming esports

Compulsion Games Finalizes Split from Xbox, Takes Self-Publishing Rights for South of Midnight

The Montreal-based studio is now officially listed as the publisher of South of Midnight on Steam, ensuring revenue goes directly to the independent developers.

By Meera Iyer

Independent Developers 40%Corporate Publishers 30%Consumers and Gamers 30%
Independent Developers
Focuses on the creative freedom and financial autonomy that comes with self-publishing.
Corporate Publishers
Views the spin-outs as a necessary restructuring to streamline bloated gaming divisions.
Consumers and Gamers
Values the ability to directly support creators and bypass corporate ecosystems.

Key terms

Self-Publishing
When a video game developer releases and distributes their own game directly to platforms, keeping the revenue rather than splitting it with a corporate publisher.
Metadata
The underlying data on a digital storefront that dictates backend operations, such as which company is credited as the publisher and receives the sales revenue.
Divestiture
The process of a large corporation selling off or spinning out a subsidiary business, as Microsoft did with several of its game studios.
First-Party Studio
A game development studio that is entirely owned by the platform holder, such as Microsoft, Sony, or Nintendo.

Key points

  1. Compulsion Games is now officially listed as the publisher of South of Midnight on Steam.
  2. The metadata change ensures that revenue from PC sales goes directly to the independent studio.
  3. The studio separated from Microsoft in July 2026 during a massive corporate restructuring.
  4. Compulsion retained the rights to its entire back catalog, including We Happy Few and Contrast.
  5. Console storefronts on PlayStation and Xbox still list Microsoft as the game's publisher.
  6. The move makes Compulsion the first of the recently spun-out Xbox studios to secure self-publishing status.

On August 11, 2026, a small but highly consequential metadata edit hit Steam's backend infrastructure. The publisher field for the award-winning action-adventure game South of Midnight quietly flipped from Xbox Game Studios to Compulsion Games.[1][3]

That single database change represents the final, operational step in a Montreal-based studio's fight for independence. It means that anyone purchasing the game on Valve's PC storefront is now sending their money directly to the developers who made it, completely bypassing Microsoft's corporate accounts.[4][6]

The transition caps off a turbulent summer for Compulsion Games and the wider Xbox ecosystem. Last month, Microsoft initiated a massive corporate reset under CEO Asha Sharma, resulting in thousands of layoffs and the divestiture of multiple first-party studios.[1][5]

Rather than facing outright closure, Compulsion Games successfully negotiated a spin-out to return to independent management. Crucially, the studio retained the rights to its entire back catalog, including Contrast, We Happy Few, and the critically acclaimed South of Midnight.[5]

The timeline of Compulsion Games' journey from acquisition to independence.

The Steam update proves that the legal separation has now materialized into actual financial infrastructure. On digital storefronts, the publisher field is not a cosmetic credit—it dictates the routing of revenue from every single transaction.[3]

Compulsion's rapid move to self-publishing puts it ahead of the curve compared to other studios caught in the same restructuring wave. Double Fine Productions, which also regained its independence, still lists Xbox Game Studios as the publisher for Psychonauts 2 on Steam.[3][6]

Meanwhile, other spun-out developers like Ninja Theory and Undead Labs were acquired by unnamed third-party publishers, leaving their respective titles—Senua's Saga: Hellblade II and State of Decay 3—temporarily carrying the old Xbox branding by default.[1][3]

The stakes for Compulsion Games are incredibly high. Without the financial safety net of a trillion-dollar parent company, the studio must rely on the sustained sales of its existing portfolio to fund its operations and its next unannounced project.[5]

The publisher field on Steam dictates where the revenue from every transaction is routed.

Fortunately, South of Midnight provides a strong foundation. Released in April 2025, the game earned widespread praise for its striking stop-motion art style and its deep dive into Southern Gothic folklore and African American experiences.[4][6]

Fortunately, South of Midnight provides a strong foundation.

The title recently swept the Canadian Game Awards, taking home Game of the Year, and added three more trophies—including another Game of the Year nod—at the Games for Change festival in New York just weeks after the Xbox split.[4]

For consumers, the publisher swap removes a significant barrier to entry. Players who had previously held off on purchasing the game due to frustrations with Microsoft's corporate decisions or broader industry boycotts now have a clear path to support the developers directly.[4]

The transition is not entirely seamless, however. While the PC storefront has been updated, South of Midnight is still listed as being published by Microsoft on both the PlayStation and Xbox digital stores.[1]

Compulsion Games is the first of the spun-out Xbox studios to secure self-publishing status on Steam.

Updating console storefronts is traditionally a slower, more bureaucratic process than pushing changes to Steam's backend. It remains unclear whether Microsoft retains any residual revenue-sharing clauses for console sales, or if the delay is purely administrative.[1][3]

Regardless of the console lag, the Steam update is a definitive victory lap for Compulsion Games. In an era where studio closures and mass layoffs have become grimly routine, a developer successfully buying its freedom and taking control of its own revenue stream is a rare and vital win.[2][6]

As the industry watches closely, Compulsion's path forward will serve as a critical test case. If the studio can thrive on the direct revenue of its self-published catalog, it may offer a blueprint for other developers seeking to escape the volatility of corporate consolidation.[3][5]

Frequently asked

Why did Compulsion Games split from Xbox?

The studio separated from Microsoft during a massive corporate restructuring in July 2026 that involved thousands of layoffs and the divestiture of multiple first-party developers.

Who gets the money if I buy South of Midnight now?

If purchased on Steam, the revenue goes directly to Compulsion Games. The console storefronts on PlayStation and Xbox have not yet updated their publisher listings.

Did Compulsion Games get to keep their other games?

Yes. As part of the separation agreement, the studio retained the intellectual property rights to its entire catalog, including Contrast, We Happy Few, and South of Midnight.

Are other former Xbox studios self-publishing their games?

Not yet. Double Fine's Psychonauts 2 is still published by Xbox on Steam, while studios like Ninja Theory and Undead Labs were acquired by unnamed third-party publishers.

Why this matters

The transition proves that a studio can survive a massive corporate restructuring and emerge with direct control over its own revenue. For players, it means purchasing South of Midnight on PC now directly funds the independent developers who made it, completely bypassing Microsoft.

Sources

Source coverage

6 outlets

3 viewpoints surfaced

Independent Developers 40%Corporate Publishers 30%Consumers and Gamers 30%
  1. [1]EurogamerIndependent Developers

    Developer Compulsion Games is now listed as the publisher of its beautiful, musical action adventure game South of Midnight on Steam

    Read on Eurogamer
  2. [2]ShacknewsCorporate Publishers

    Compulsion Games removes Xbox as publisher of South of Midnight on Steam

    Read on Shacknews
  3. [3]Games.ggCorporate Publishers

    Xbox's Split from Compulsion Games Seems Complete on Steam

    Read on Games.gg
  4. [4]Console CreaturesConsumers and Gamers

    Compulsion Games is now listed as South of Midnight's publisher on Steam

    Read on Console Creatures
  5. [5]GamesIndustry.bizIndependent Developers

    Compulsion Games and Double Fine release statements on Xbox split

    Read on GamesIndustry.biz
  6. [6]GamesReviews.comConsumers and Gamers

    Compulsion Games Removes Xbox as South of Midnight's Steam Publisher After Split

    Read on GamesReviews.com

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