South of Midnight co-director David Sears has offered a remarkably honest assessment of Xbox’s former approach to funding games, saying the company’s generosity was unlikely to last. In an interview with MinnMax, the Compulsion Games veteran said he often wondered how Xbox was able to support so many projects with little apparent concern for commercial risk.

“They were funding a lot of games. They were also funding a lot of studios,” Sears said. “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?”

Sears said he frequently asked other directors how Xbox’s approach was sustainable, describing the period as a “golden era” while warning that it could not continue forever. He recalled telling colleagues that someone would eventually “close those floodgates,” with painful consequences for developers.

That prediction appears to have come true under new Xbox CEO Asha Sharma, whose restructuring has brought mass layoffs and studio closures across the company. Compulsion Games, the team behind South of Midnight, was able to become independent, while Ninja Theory faces closure and Arkane’s future remains uncertain.

Despite praising Microsoft for supporting South of Midnight’s creative vision, Sears admitted that, in hindsight, he probably would not have funded the game if he had been an Xbox executive. “I wanted to make it. No doubt, and obviously, because we made it,” he said. “Would I have turned off someone else’s money flow before South of Midnight? Yeah, ’cause I’m not completely selfless.”

He added that Xbox’s previous funding model was “unsustainable,” making a difficult reckoning feel inevitable.

Sears’ comments align with recent remarks from inXile CEO Brian Fargo, who told Fortune that Xbox studios must now present a proper “investable business case” rather than expect open-ended funding. The shift marks a major change from the era when Microsoft acquired studios and backed ambitious projects with relatively few commercial conditions.

South of Midnight received generally positive reviews, with critics praising its storytelling, visual style, and soundtrack while criticizing repetitive combat and platforming. Despite later launching on PlayStation 5 and Nintendo Switch 2, the game is believed to have struggled commercially.

Sears’ honesty offers a rare behind-the-scenes view of how quickly priorities can change. The same freedom that allowed South of Midnight to exist may also have made its eventual fate feel inevitable.