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South of Midnight is the latest title from Compulsion Games, a studio that used to be under Microsoft's umbrella before it reclaimed its independence earlier this year.
It seemingly underperformed, even with ports to other platforms, including PS5, just under a year after its Xbox launch.
Now, in a new interview with Minnmax, the game's director, David Sears, has made new comments about the game and Xbox's funding at the time.
To summarise, he says that, while it was highly commendable of the company to support smaller, higher-risk titles such as South of Midnight and Double Fine's Keeper, it was ultimately unsustainable because the "infinite money" had to stop at some point.
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"They were funding a lot of games," Sears says. "They were also funding a lot of studios that, you know, I was like 'well, okay, great, I guess you have infinite money, you do you, I want less. I don't want to feel the weight of the obligation of a giant budget, or an army of 600 to be responsible for. I want to make something that isn't going to bankrupt Microsoft or the games division.'"
"So on one hand, if everyone you're working with is either trying to make generational games at not a huge expense, or games that have huge or really significant contemporary commercial appeal – great, it's going to work. But when does that ever happen, right?"
Sears was "always worried" about South of Midnight suddenly losing funding, suggesting that if he was heading up Xbox, he "probably" would have done exactly that.
"I literally told people, 'Wow, this could be terrible.' Because somebody is going to say one day, 'We're closing those floodgates.' And that's going to have really traumatic results downstream."
He continues:
"I mean, I wanted to make it, no doubt, right? Obviously, because we made it. Would I have turned off someone else’s money flow before South of Midnight? Yeah, because I’m not completely selfless.
"But, you know, it just seems like in hindsight at least, it was unsustainable, so of course, it was going to have a 'shocking' outcome."
While there have been no official sales figures for South of Midnight, analytical estimates from Alinea back in April 2026 had the PS5 version specifically at about 16,000 sales.
Other data, such as Steam player counts, don't paint a particularly rosy picture either, and Sears' own comments in this interview also suggest it didn't hit its mark.
For a while, Xbox was funding games of all shapes and sizes in order to fill out Game Pass, but this approach, spearheaded by former CEO Phil Spencer, doesn't seem to be in place anymore, with his replacement, Asha Sharma, making severe cuts to get the business back on track.
South of Midnight is a great game, by the way, but if even the director was doubting its commercial potential, it was clearly not going to be a big seller.