At least a dozen employees of Compulsion Games, the Microsoft Xbox Game Studios-owned developer, have posted on LinkedIn that they are leaving or seeking new jobs, signaling significant departures ahead of expected layoffs early next month [1, 2, 3, 4]. Compulsion Games is known for the titles We Happy Few and South of Midnight, which was released in April 2025 [1, 5, 2].

Xbox leadership has reportedly allowed Compulsion staff to openly search for new employment now, before layoffs slated for early July 2026 [3, 4]. Bloomberg reporter Jason Schreier explained that no layoffs have occurred yet, but leadership gave permission to look because job losses are almost certain [3]. This contrasts with some reports suggesting at least a dozen employees have already departed [1].

Among those announcing departures are senior employees such as Mike Sklavounos, principal level designer, who wrote, “In an unexpected turn of events, I’ve officially turned on the ‘open to work’ banner,” and Bijan Stephen, writer and narrative designer, who said he is searching for his next opportunity after several years at the studio [1, 2, 4]. Other staff leaving include dialogue designer Sean M. and senior environment artist Jasjot Singh [1, 2, 4].

The layoffs are part of a broader Xbox Game Studios restructuring involving multiple owned studios including Ninja Theory, Double Fine, Flight Simulator support teams, and World's Edge [5, 6, 3, 4]. Over 1,000 employees across Xbox Game Studios may be affected, with Compulsion’s cuts possibly impacting more than 90 staff [1, 5, 6].

Xbox CEO Asha Sharma cited severe financial challenges prompting the restructuring, with a $20 billion investment into gaming over five years and current annual revenue losses around $500 million [5]. It remains unclear whether Compulsion Games will continue operating with fewer staff or face full closure after the cuts [5, 2, 4].

Rumors about Compulsion’s future and potential shutdown began circulating mid-June, followed by growing employee departures and job hunt announcements spanning June 20 to 25 [1, 5, 6, 3, 4]. The internal memo from CEO Sharma on June 26 brought the financial pressures and restructuring plans into public view [5].

Major layoffs at Compulsion Games and other Xbox Game Studios are expected to start in early July 2026 [3, 4].