Compulsion is the studio behind South of Midnight, which has been a critical darling on Xbox recently — and it's worth noting that they were brought in as an outside developer by Microsoft. The split between Activision Blizzard and Xbox meant Compulsion became eligible for new contracts under regulatory pressure, but their original deal was temporary. Now they need more work from MS or elsewhere, so the studio is pitching itself as a co-development partner on future projects. They have serious talent — people who made Starbreeze's The Witcher 3 team strong in their previous stint at that house of games! It makes sense to keep them close since South of Midnight did well.

Compulsion has been actively talking with Microsoft about these new arrangements, and they're also looking for independent co-dev work beyond the Xbox deal. They want a long-term partnership where they can support bigger productions instead of just making their own games every cycle. Microsoft hasn't committed to anything yet, but Compulsion is pushing hard because they need stability after this transition period. I honestly think keeping them as an in-house co-dev partner would be the smart move for Xbox — too much good talent to let walk away now. They could bolster several upcoming titles with their lighting and atmosphere expertise which they've proven at a high level already!

Source: https://www.rockpapershotgun.com/following-xbox-split-south-of-midnight-devs-compulsion-are-looking-for-work-as-a-co-development-or-support-studio