Microsoft's Xbox "reset" - a restructuring that will cut 3,200 jobs across the company - is reshaping Obsidian Entertainment's future in a significant way. According to a Bloomberg report by Jason Schreier, the studio has cancelled multiple in-development projects, including a planned Avowed sequel, and is pivoting to work on a new Fallout game.
Josh Sawyer leads the charge back to the Wasteland
Studio design director Josh Sawyer will lead the new Fallout title, marking Obsidian's return to the post-apocalyptic franchise after releasing Fallout: New Vegas back in 2010. Sawyer is one of the most respected RPG directors in the industry: he served as project director and lead designer of Fallout: New Vegas, and is a design director at Obsidian who previously worked at Black Isle Studios on the cancelled Van Buren project.
Prior to this shift, Sawyer had been directing a role-playing game that was "similar structurally and thematically to Fallout," but was not part of the franchise. That unannounced project is now apparently shelved in favour of the real thing.
According to the Bloomberg report, Bethesda Game Studios will work with Obsidian on the new Fallout project. Schreier notes that this "emerging strategy is still in flux," so there is no guarantee the Fallout project will ultimately see the light of day.
Avowed sequel cancelled, other projects shelved
The sequel to Avowed - the 2025 first-person RPG set in the studio's Pillars of Eternity universe - is one of multiple unannounced games in development that have been cancelled amid the bloodletting. The primary source notes that the Avowed sequel was reportedly "going well" and would have been announced within the next year.
The restructuring does not mean Obsidian is abandoning everything else, however - Bloomberg reports that the studio will continue supporting The Outer Worlds 2 with post-launch DLC while also remaining involved with Grounded 2.
Some developers who had been working on Avowed 2 are reportedly being reassigned while they wait for larger projects - including Fallout - to ramp up, leaving open the possibility that the fantasy RPG sequel could eventually return in some form.
The human cost of the Xbox reset
Obsidian has cancelled multiple projects and laid off a quarter of its staff. A WARN notice issued in California indicates that 52 employees were let go from the Irvine-based developer. Kotaku reports around one quarter of the staff was impacted, with 60-70 roles cut across all departments, with some cuts immediate and some staff told they will be part of an upcoming second wave.
Xbox CEO Asha Sharma announced that Microsoft will lay off around 3,200 workers over the next fiscal year, with 1,600 roles affected immediately. The cuts touch every studio and effectively every type of role within Xbox, which she deemed "unhealthy" in a blunt blog post.
Studios are redirecting their focus toward franchises such as Fallout, The Elder Scrolls, Doom, Quake, and Wolfenstein. The Fallout franchise has not received a brand-new mainline release since Fallout 76 in 2018, while Bethesda has remained focused on Starfield and The Elder Scrolls 6. In the meantime, Amazon's Fallout TV series introduced millions of new fans to the post-apocalyptic RPG universe, helping drive player counts for older Fallout games to new highs and making the franchise one of Xbox's biggest long-term investments.
Where it leaves the original Fallout
While the series waits for its next major entry, the original Fallout: A Post Nuclear Role Playing Game - the 1997 RPG that started it all - remains one of the best ways to experience the franchise's roots. It laid the foundation for every Pip-Boy, bottle-cap economy, and morally ambiguous wasteland that followed.
Buy Fallout: A Post Nuclear Role Playing Game
Live deal tracker
Fallout is currently available from key resellers at CA$2.41 - a solid entry point into the franchise while the wait for a new Obsidian-led chapter begins.
The prospect of Sawyer directing a full Fallout game - with Bethesda's backing and 16 years of additional RPG craft under his belt - is genuinely exciting news for RPG fans, even if it comes wrapped in troubling context. Dozens of talented developers losing their jobs to make this pivot happen is a painful trade-off, and Bloomberg's caveat that the strategy is "still in flux" means nothing is certain yet. For now, the series' best hope appears to be heading back to the studio that last made it shine.
