In a significant pivot for the studio, Obsidian Entertainment has reportedly shifted its primary development efforts toward a brand-new entry in the Fallout series, according to a report from Bloomberg. This strategic redirection comes at a cost, with several active projects—most notably the sequel to the 2025 RPG Avowed—being shelved indefinitely.
The transition arrives amidst broader turbulence within Xbox’s gaming division, which has seen widespread layoffs impacting approximately 25% of Obsidian’s workforce, including the departure of veteran art director Daniel Alpert. Sources indicate that under the direction of Xbox leadership, the studio is moving to consolidate its resources around major established intellectual properties. Studio design director Josh Sawyer, who previously helmed the fan-favorite Fallout: New Vegas, is reportedly leading the new project.
Before this abrupt change in direction, development on Avowed 2 was reportedly progressing well, with an announcement tentatively planned for the coming year. However, the title failed to align with the revised corporate roadmap set forth by Xbox CEO Asha Sharma. While the project is currently suspended, reports suggest that some staff members are continuing foundational work on it in the hopes that the sequel might eventually be resurrected.
The past year has been a period of immense activity for Obsidian, marked by the release of Avowed, Grounded 2 (early access), and The Outer Worlds 2. Despite generally favorable critical reception, Avowed and The Outer Worlds 2 reportedly struggled to meet internal commercial expectations. Moving forward, Obsidian intends to balance the development of its new Fallout title with ongoing support for Grounded 2 and upcoming downloadable content for The Outer Worlds 2.
The industry remains in flux following a series of aggressive restructuring efforts across the Xbox ecosystem. For more context, read about the significant staff reductions at id Software and the news that IO Interactive has reclaimed rights to its RPG, Project Fantasy, following its separation from Xbox. You can also revisit our analysis of Avowed and The Outer Worlds 2.
Source: Bloomberg
