South of Midnight’s Epic Failure: Sweet Baby Inc.’s Latest Misstep in a Troubled Gaming Landscape

The gaming world is buzzing with the news that South of Midnight, a highly anticipated action-adventure title from Compulsion Games and backed by Sweet Baby Inc.’s narrative consulting, has crashed on launch, drawing fewer than 1,500 concurrent players on Steam. Released in April 2025 as a first-party Xbox Game Pass title, the game promised a vibrant journey through Southern Gothic folklore, blending mythos, magic, and a unique aesthetic. Instead, it’s become the latest in a string of flops associated with Sweet Baby Inc., a studio increasingly criticized for prioritizing ideological narratives over compelling gameplay. As fans and critics dissect this failure, questions arise about the studio’s influence, Microsoft’s oversight, and the broader state of the gaming industry. What went wrong, and why is this collapse resonating so loudly? Let’s dive into the chaos.

The Promise of South of Midnight

Developed by Compulsion Games, a Microsoft-owned studio known for We Happy Few, South of Midnight aimed to stand out in a crowded market. Set in a fictional Deep South, the game follows Hazel, a young woman called to become a “Weaver,” wielding ancient powers to mend broken spirits and confront mystical creatures. Its reveal at Xbox’s 2023 showcase dazzled with stop-motion-inspired visuals, a haunting soundtrack, and a premise rooted in the creative director’s Southern upbringing. Microsoft positioned it as a Game Pass flagship, banking on its blend of narrative depth and exploration to draw players.

Sweet Baby Inc., a Montreal-based narrative consultancy, was brought on to shape the story and characters. Founded in 2018 by ex-Ubisoft developers, the studio has worked on titles like God of War Ragnarök and Alan Wake 2, focusing on diversity, equity, and inclusion (DEI) in storytelling. For South of Midnight, they collaborated on Hazel’s arc and the game’s cultural tone, aiming to reflect the South’s complex history. Early previews praised the concept, but warning signs emerged as development progressed, hinting at a disconnect between ambition and execution.

A Launch Day Disaster

When South of Midnight hit Steam Early Access in April 2025, the numbers were grim. Despite heavy promotion, the game peaked at just 1,411 concurrent players on launch day, with some reports citing figures as low as 184. For a Microsoft-backed title with Game Pass availability—meaning players could try it “free” with a subscription—this was a catastrophe. By comparison, indie games with smaller budgets often hit five-digit player counts at launch. Social media erupted, with gamers calling it a “death sentence” for Compulsion Games and a nail in Sweet Baby Inc.’s coffin.

The game’s full release on April 8 didn’t fare much better. Steam Charts recorded a steady decline, with concurrent players struggling to break 1,000 a week later. On Xbox, engagement was reportedly low, though Microsoft doesn’t share detailed metrics. The contrast was stark: Hi-Fi Rush, another Xbox exclusive, hit 6,000 concurrent players despite a surprise launch, while South of Midnight floundered despite years of hype. Fans dubbed it a “bust,” with some joking it couldn’t even compete with 2024’s notorious flop Dustborn.

Why Did It Fail?

Several factors contributed to South of Midnight’s downfall. First, gameplay disappointed. Previews described it as a “bland, generic” action-adventure with repetitive mechanics and a short runtime—roughly six hours for the main story. Players expected a rich, open-ended experience but got linear levels and shallow combat, likened to a “safe Crash Bandicoot clone.” The stop-motion aesthetic, while striking, felt gimmicky in practice, with clunky animations turning off those seeking fluid gameplay. A vocal minority praised the visuals, but most found them a poor substitute for substance.

Second, the narrative—Sweet Baby Inc.’s domain—drew heavy criticism. Gamers reported dialogue heavy with modern slang and moralizing, clashing with the Deep South setting. Hazel’s story, meant to explore family trauma and cultural roots, was called “disjointed” and overly focused on identity themes at the expense of folklore. Rumors swirled that the protagonist was originally a white woman, race-swapped after Sweet Baby’s involvement, though no hard evidence confirms this. Regardless, the story failed to resonate, with players on forums lamenting a lack of authenticity in depicting Southern culture.

Third, development turmoil played a role. Insiders claim Compulsion Games lost nearly 90% of its We Happy Few team post-Microsoft acquisition, with new hires and promotions prioritizing DEI over experience. Former developers described a “mess of a project,” with unqualified leads and a studio culture stifled by external mandates. The community manager’s past posts—calling gamers “a mistake” and expressing disdain for certain demographics—further alienated fans, fueling perceptions of a studio out of touch.

Sweet Baby Inc.’s Troubled Track Record

Sweet Baby Inc.’s involvement has become a lightning rod. The studio’s mission to promote diverse narratives has sparked both praise and backlash. Supporters argue it brings fresh perspectives to gaming, citing successes like God of War Ragnarök’s nuanced portrayal of Angrboda. Critics, however, point to a pattern of flops—Suicide Squad: Kill the Justice League, Flintlock: The Siege of Dawn, Tales of Kenzera: Zau—where their input allegedly led to heavy-handed storytelling that alienated players. South of Midnight fits this mold, with its low player counts mirroring Flintlock’s 648-peak debut.

The backlash isn’t just about quality. Gamers accuse Sweet Baby of injecting “woke” agendas, prioritizing ESG (Environmental, Social, Governance) scores over fun. Since 2024, a vocal online movement has tracked the studio’s projects, claiming they dilute developers’ visions for corporate checkboxes. South of Midnight’s failure has amplified this narrative, with posts online declaring it “another DEI disaster.” While some dismiss these critiques as overblown or bigoted, the numbers don’t lie—games tied to Sweet Baby are struggling to find audiences.

Microsoft’s Game Pass Gamble

Microsoft’s role can’t be ignored. As Compulsion’s parent company, it greenlit South of Midnight and pushed it as a Game Pass showcase. The subscription model, once hailed as gaming’s future, is under fire for incentivizing quantity over quality. Critics argue Game Pass devalues titles by making them “free,” reducing urgency to play. South of Midnight’s dismal turnout, even with no upfront cost, suggests players aren’t just apathetic—they’re actively uninterested. Microsoft’s recent closure of Tango Gameworks, despite Hi-Fi Rush’s success, has fueled speculation that Compulsion could face cuts, though its DEI focus might shield it temporarily.

The broader Xbox ecosystem is reeling. Layoffs hit 1,900 staff in 2024, and titles like Starfield underperformed expectations. South of Midnight’s flop adds pressure on CEO Phil Spencer, who’s defended Game Pass as a growth driver. If first-party games can’t draw crowds, the model’s sustainability is in question. Some fans even predict Microsoft might exit gaming hardware, focusing solely on software and subscriptions.

The Cultural Clash

South of Midnight’s failure taps into a larger gaming culture war. On one side, advocates for diversity argue that representation strengthens stories, pointing to successes like Spider-Man: Miles Morales. On the other, a growing cohort of gamers rejects what they see as forced inclusivity, demanding entertainment free of “preaching.” Sweet Baby Inc. has become a symbol of this divide, with its projects scrutinized for any hint of agenda-driven design. A 2024 poll found 65% of gamers prioritize gameplay over narrative, up from 50% in 2020, signaling a shift away from story-heavy titles like South of Midnight.

The Deep South setting added fuel. Some players felt a Montreal-based, predominantly white team lacked the cultural knowledge to portray the region authentically, especially under Sweet Baby’s guidance. Others saw no issue, arguing fiction doesn’t need lived experience. The debate mirrors controversies over historical accuracy in games like Assassin’s Creed Shadows, showing how sensitive cultural representation has become.

What’s Next?

For Sweet Baby Inc., South of Midnight is a blow. The studio’s upcoming projects, including work with Bethesda, face heightened skepticism. CEO Kim Belair has defended their mission, but mounting flops could force a pivot or risk irrelevance. Compulsion Games, meanwhile, may struggle to regain trust. If Microsoft tightens its belt, the studio’s future hangs in balance, despite its “plot armor” from DEI alignment.

Gamers, too, are at a crossroads. The backlash against Sweet Baby suggests a demand for authenticity—stories that feel organic, not engineered for scores. Yet, the industry’s push for inclusivity isn’t slowing, backed by investors like BlackRock. South of Midnight’s failure could spark change, but it’s unclear if studios will prioritize gameplay or double down on ideology.

Conclusion: A Wake-Up Call

South of Midnight was meant to weave a spell, but it’s unraveled into a cautionary tale. Sweet Baby Inc.’s fingerprints, Compulsion’s missteps, and Microsoft’s faltering vision turned a promising game into a ghost town. As the gaming world moves on, this flop underscores a truth: players crave fun, not lectures. Whether the industry listens—or keeps chasing agendas—will shape the next chapter. For now, South of Midnight lies in ruins, a reminder that even the most magical ideas can’t survive a disconnect from what gamers truly want.