Compulsion Games and Double Fine – two formerly Xbox-owned developers now spun out from the Xbox family of studios as Microsoft enacts a deep round of cuts and divestitures – have released statements about the changes.

Reports that Xbox was allegedly shuttering We Happy Few and South of Midnight developer, Compulsion Games, first began to circulate last month, with Tim Schafer's Double Fine and Hellblade developer Ninja Theory also reportedly at risk of closure.

Compulsion Games has now confirmed the studio will "return to independent management," and retain the rights to Contrast, We Happy Few, and South of Midnight.

Here's Compulsion Games' statement in full:

When Compulsion Games was founded in 2009 as an independent studio, we were just a few dreamers in a leaky old gramophone factory devoted to creating rich storylines and experiences that felt handcrafted. We care about the craft of making games, the stories we tell, the players who experience them, and the assembled creators who put their heart and soul into doing something different. Today, we're sharing that Compulsion Games will return to independent management following our time as part of Xbox. As part of this transition, we will retain the rights to Contrast, We Happy Few, and our award-winning South of Midnight. We're grateful for the years we spent with Xbox, for the support they provided our team, and for the opportunity to bring these games to players around the world. As an independent studio, we're excited to continue building the distinctive games that define Compulsion while taking the next steps in our journey. Our immediate priority is to support our team throughout this transition period. We are confident in the future of Compulsion Games and look forward to this next chapter where one thing will remain constant: we will create unique games that tell important stories, all with the goal of touching the hearts and minds of our players.

Double Fine marked the changes with a blog post entitled "Independence Day," writing:

Once again, Double Fine Productions will be an independent studio. We're thankful to everyone at Xbox for seven great years together, and for working with us to reach an outcome which preserves our history and culture, and returns ownership of our games to us. To everyone who has reached out to us these past few weeks: Thank you so much for all your kind words, we've been deeply touched by all your messages. We will share more news soon on what comes next. Your continued support is greatly appreciated, Tim & All at Double Fine.

After weeks of speculation, the sweeping job cuts announced at Xbox earlier today (July 6) have been formally announced. The loss of 3,200 staff, around 20% of the organisation, was announced this morning via an internal memo that was also posted to X. CEO Asha Sharma confirmed that five studios were to be divested, with Double Fine and Compulsion Games becoming independent, and Ninja Theory and Undead Labs in the process of being acquired. Arkane Lyon has entered a consultation process in line with French employment law.