David Sears, the director of South of Midnight, has admitted that Microsoft likely should not have financed the project. In an interview with Ben Hanson from MinnMax, Sears discussed the decision by Xbox to back ambitious titles like South of Midnight and Double Fine's Keeper. Both he and the publisher understood these projects would not generate significant profits but were intended to enhance Xbox's prestige.
Despite the creative ambition, the financial reality was stark. Rumors suggest South of Midnight cost Microsoft more than $100 million. The project failed to recoup its investment due to poor sales figures. Following the game's debut, this lack of commercial success resulted in the separation between Xbox and Compulsion Games.
Sears noted that he had warned his team during development about the risks of such high spending. He recalled predicting that someone would eventually say, "Turn off the taps, stop this flow of money," leading to traumatic consequences. When asked if he was grateful for Microsoft's support but personally would not have funded it himself, Sears replied, "No, probably not." He emphasized that while he wanted to make the game and they succeeded in doing so, hindsight makes it clear the situation was unsustainable.
Reflecting on the industry climate at the time, Sears described how other directors questioned if they were living in a golden age of gaming. He responded that it was only temporary, noting that eventually, "the night comes when Rome burns." He admitted he did not know exactly when this shift would occur but had always been concerned by the thought.
Prior to South of Midnight, Compulsion Games was known for titles such as Contrast in 2013 and We Happy Few in 2018. The studio was acquired by Microsoft shortly before the release of We Happy Few and became part of Xbox Game Studios. As of now, it remains unclear what the Canadian developers are currently focusing on following their departure from the publisher.
Sources: Everyeye.it.