South of Midnight director says he wouldn't have greenlit the game at Xbox

South of Midnight director David Sears says he would not have funded the game if he had been in charge at Xbox, telling MinnMax he spent the entire development cycle expecting Microsoft to cut the project's funding.

"There's always a night when Rome burns," Sears told MinnMax host Ben Hanson. "And I didn't know exactly when it would be, but I was always worried about it."

Sears directed the action-adventure title at Compulsion Games, the Montreal studio Microsoft acquired in 2018. He left Compulsion in 2025, before Microsoft began divesting from the studio earlier this year.

What was Xbox actually funding?

Sears recalls that Xbox leadership told studios like Compulsion their goal was building a portfolio of non-mainstream titles to diversify the platform's library. He doesn't name Game Pass (Microsoft's subscription service) as a driver, but the timing lines up with Xbox's push to stockpile games for the service.

His verdict on the strategy is blunt: the portfolio diversification initiative was wobbly and lacked a long-term view.

"They were funding a lot of games," Sears said. "They were also funding a lot of studios that I was like 'Well. Okay. Great, I guess you have infinite money, you do you. I want less.'"

He expanded on the point: "I don't want to feel the weight of the obligation of a giant budget, or an army of six hundred to be responsible for. I want to make something that isn't going to bankrupt Microsoft or the games division."

Sears isn't alone in this assessment. In an interview with Bloomberg, Double Fine studio head Tim Schafer danced around a similar conclusion, but believed the studio's games would have found some audience — and that profitability alone would not have saved them from Microsoft's cost cuts.

The outcome Sears expected

Asked how he would have shut off the tap himself, Sears didn't hesitate: "It just seems like in hindsight at least, it was unsustainable—so of course, it was going to have a shocking outcome."

The irony is sharp. South of Midnight shipped to critical recognition, winning a Game Award for Games for Impact, a Change Award, a D.I.C.E. award, a BAFTA, and a 2025 Peabody Award. Then-incoming CEO Asha Sharma bragged about those honors on social media — before announcing her "reset" initiative at Xbox that cut Compulsion loose.

A softer landing than expected

Despite the divorce, Sears applauds Microsoft for letting Compulsion go independent rather than shutting it down. He calls the modern Microsoft "more humane" than in the past, based on his own dealings with the company.

"It's remarkable and commendable, and the fact they didn't do what their predecessors might have done," Sears said of Compulsion's former parent company.

What does this change for studios betting on platform-holder funding? Sears's account is a data point that even award-winning projects under a diversification mandate carried internal expectations of cancellation — and that developers priced that risk in from day one. Watch how Compulsion performs as an independent studio; its first self-funded moves will signal whether Xbox's humane exit was a lifeline or a slow cut.