Compulsion Games was founded in Montreal in 2009 by Guillaume Provost, who had previously worked for Arkane Studios.[4] To raise funds for their first game, the team of Compulsion Games worked on external projects, including Darksiders, Dungeon & Dragons: Daggerdale, and Arthur Christmas: Elf Run.[5]
At E3 2018, Microsoft announced they entered into an agreement to acquire Compulsion Games, which would become part of Microsoft Studios (now known as Xbox Game Studios).[6] At the time of the acquisition, Compulsion Games had 40 employees.[7] By October 2021, the studio had further doubled its staff since the release of We Happy Few, and was working on a narrative, third-person perspective game, though would avoid some missteps from We Happy Few, such as using roguelike elements or an early access approach.[8]