There’s a particular kind of freedom that arrives with a pink slip. Compulsion Games — the Montreal studio behind We Happy Few and this year’s stylish, folklore-soaked South of Midnight — bought back its independence from Microsoft during Xbox’s latest round of mass layoffs. Days later, it is publicly advertising for work as a co-development and support studio, open to partners “across the games and entertainment industry.”
Read the two beats together and the story tells itself. This is not a triumphant indie liberation narrative. It’s a studio doing the math on payroll.
The support-studio safety net
When a team loses its first-party publisher, the immediate problem isn’t creative vision — it’s runway. Original games take years and burn cash the entire time. Co-development and support work (building levels, tools, art, or systems for someone else’s project) is the industry’s classic bridge: it keeps experienced people employed and the studio solvent while a new owned project finds funding.
It’s a pragmatic, even healthy, move. Plenty of respected studios have kept the lights on this way for years. But making the pitch publicly, one week out from the split, signals urgency more than strategy. Studios with a comfortable cushion tend to quietly line up their next deal before announcing anything. Broadcasting availability is how you cast a wide net fast.
What Xbox’s cuts actually produced
The uncomfortable subtext here is about Microsoft. South of Midnight shipped in 2026 to strong reviews as an Xbox first-party title — exactly the kind of distinctive, mid-budget, artistically ambitious game the platform claims it wants more of. Then the studio that made it was cut loose in the same wave of layoffs that has gutted teams across the organization.
You can defend the business logic of a shrinking first-party footprint. What’s harder to defend is the message it sends to every remaining creative team: deliver a critically praised game and you may still be surplus by the next fiscal quarter. That is corrosive to the exact talent Xbox spent years and billions acquiring.
The bigger pattern
Compulsion’s job hunt is one data point in a brutal stretch for the industry, but it’s an unusually clean one. A studio can make a good, original game inside the best-resourced platform holder in the business and still end up soliciting contract work to survive. “Independent” has quietly become a euphemism for “unfunded.”
The optimistic reading is that Compulsion’s people are talented and the co-dev market values that. The realistic reading is that the safety nets keeping creative studios alive now sit outside the platform holders, not inside them — and every layoff wave makes that net a little more crowded.