Microsoft’s latest Xbox restructuring is reportedly changing what Obsidian Entertainment gets to make, and what its staff no longer gets to finish. Bloomberg reports that Obsidian has begun work on a new Fallout game while canceling several other projects, including a planned follow-up to Avowed.
The shift lands during a broader Xbox overhaul that includes layoffs affecting 3,200 employees, studio disposals, and a stated move toward “higher priority projects.” Translated out of corporate fog: Microsoft is cutting people and bets, then steering remaining development toward properties it thinks can carry more weight.
For Obsidian, that apparently means Fallout. Bloomberg says Josh Sawyer, Obsidian’s studio design director, is leading the new entry. Sawyer is an unusually relevant name here: he directed Fallout: New Vegas, the 2010 role-playing game that remains the version many Fallout sickos bring up any time Bethesda sneezes near the franchise. He also directed Pentiment, Obsidian’s 2022 narrative game.
Bloomberg reports that Sawyer had been running another role-playing project that resembled Fallout in structure and themes but was not actually part of the Fallout series. Under the new plan, Obsidian’s work is being redirected into the real brand, badge and all.
Avowed sequel reportedly dropped
The most visible casualty is a sequel to Avowed, Obsidian’s first-person fantasy RPG released last year. According to Bloomberg, that sequel was progressing well and was expected to be announced within the next year. Microsoft and Obsidian are apparently not moving ahead with it anyway.
That is the awkward part of portfolio management in games: “going well” is not the same as being spared. If Bloomberg’s account is accurate, Xbox’s current filter favors known franchises over a newer Obsidian setting, even one far enough along to have an announcement window.
Obsidian is not being turned into a one-game shop, at least based on the reporting so far. Bloomberg says the studio still plans to continue work on Grounded 2, which is in early access, and downloadable content for The Outer Worlds 2.
Fallout has momentum outside games
The move also comes while Fallout is enjoying a run on television. Amazon’s Fallout adaptation has been successful enough to receive a third season. Xbox, however, has not shipped a new Fallout game since Fallout 76 in 2018.
That gap is the business logic Microsoft appears to be chasing. A revived television audience is useful only if the games side can put something new in front of players before the heat cools. Obsidian, thanks to New Vegas and Sawyer’s history with the series, is the studio Xbox can point at without requiring a long lecture from marketing.
Xbox spokesperson Delaney Simmons declined to comment on the reported project changes. Kotaku reported separately that Microsoft laid off about 25 percent of Obsidian’s staff this week.
The confirmed piece is the layoff environment around Xbox. The reported piece is the internal reshuffling at Obsidian: Fallout moving up, Avowed’s sequel and other projects getting cut. For developers, those distinctions matter less than the practical result. Fewer people are being asked to make fewer things, with Microsoft choosing the safest radioactive wasteland it owns.
This story draws on original reporting from The Verge.
