Xbox Games Find Larger Audiences on YouTube Than Platform
Xbox games reach bigger audiences via YouTube than Xbox platform, signaling Microsoft's monetization strategy shift.
Event / Economy
Xbox Studio Closures 2026
Microsoft shuts down Compulsion Games, Montreal-based studio acquired in 2018, affecting 90+ staff. Part of broader Xbox restructuring due to unsustainable finances and declining revenues despite $20 billion investment over five years.
1 reported locations
Daily activity
0 articles0 articles
2026-08-16 to 2026-11-13 · UTC publication dates
Coverage begins 16 Jun, 01:03 UTC
Follow the documented timeline or explore the related reporting.
What happened
South of Midnight received critical acclaim but failed to build large audience
South of Midnight, an action-adventure game set in a fictionalized American Deep South, launched in April 2025 to positive critical reception with a Metacritic score of 77. Despite critical success, the game failed to find a significant commercial audience. It won multiple awards including Games for Impact at The Game Awards 2025, Best New Intellectual Property at the BAFTAs, and a Peabody Award for interactive media. The game was ported to PlayStation 5 and Nintendo Switch 2 in March 2026.
The Initiative studio closed as part of 2025 Xbox layoffs
The Initiative, a studio acquired by Xbox, was closed down in 2025 as part of another round of layoffs by Microsoft, preceding the reported closure of Compulsion Games.
Xbox leadership departures after decades at Microsoft
Craig Duncan, head of Xbox Game Studios, and Louise O'Connor, chief of staff, left Microsoft after decades with the company. These departures occurred concurrently with reports of planned studio shutdowns and layoffs.
Microsoft reportedly planning to shut down Compulsion Games
Microsoft is reportedly planning to shut down Compulsion Games, the Montreal-based studio acquired in 2018. The closure is expected to affect more than 90 staff members. Compulsion Games developed Contrast (2013), We Happy Few (2018), and South of Midnight (2025). Neither Xbox nor Compulsion Games have made official statements, though multiple employees have posted on social media indicating they are seeking new employment.
Microsoft CEO indicates greater monetization of Xbox games through YouTube than Xbox platform
Microsoft CEO Satya Nadella stated that there is more monetization of Xbox games happening on YouTube than at Xbox, indicating the platform faces business model challenges. Nadella emphasized the need for Xbox to innovate in both hardware and games in an 'economically viable way' and transform gaming into a 'sustainable business.'
Xbox CEO Asha Sharma warns of company reset and major layoffs
Xbox CEO Asha Sharma warned of a company 'reset' and indicated major layoffs and studio closures are planned. In an email to employees, Sharma stated that Xbox's business had declined to a 3% accountability margin (profit margin). She noted that excluding Activision Blizzard King, Microsoft spent over $20 billion on gaming investments over five years while annual revenue declined nearly half a billion during that time, and stated 'this cannot continue.'
Compulsion Games was recruiting for new IP months before closure report
Just months before the closure report, Compulsion Games' talent lead Joe Palin was advertising on LinkedIn for programmers for a 'fascinating, intriguing, brand new IP,' the status of which is now uncertain following the reported studio shutdown.
Read the coverage
2 alternative perspectives
Microsoft shuts down Xbox studios amid major restructuring
Microsoft closes multiple Xbox studios amid restructuring and leadership departures.