Obsidian Shifts Focus to New Fallout Game After Canceling Unannounced Projects

Obsidian Entertainment is reportedly beginning development on a new Fallout game, with studio design director Josh Sawyer leading the effort. The move follows the cancellation of several unannounced projects and a restructuring at Xbox that affected 60 to 70 Obsidian employees. Bloomberg said a small team will keep working on a planned Avowed sequel, while other groups will handle downloadable content for The Outer Worlds 2 and content for Grounded 2. Bethesda is expected to collaborate on the Fallout project, though an Xbox spokesperson declined to comment.

The studio previously delivered Fallout: New Vegas, also directed by Sawyer, which served as the backdrop for the second season of Prime Video's adaptation of the franchise. The series became Prime Video's sixth-most-watched show, and Fallout game sales rose significantly after the season premiered in December.

Obsidian is among several studios impacted by the recent Xbox restructuring. Id Software confirmed 136 layoffs, and Bethesda Game Studios in Austin reduced its workforce by 22. Reports suggest up to half of ZeniMax Online Studios' development team may be affected, with additional cuts at Activision, Blizzard, King, Mojang, and Xbox Game Studios. Five internal studios are being divested: Compulsion Games and Double Fine will become independent, Ninja Theory and Undead Labs will move to new ownership, and Arkane has entered consultation proceedings.

"Since 2018, we have aggressively expanded our studio portfolio while the number of games created each month across the industry now outpaces the last ten years combined," said Xbox CEO Asha Sharma. "We now find ourselves competing not only with the largest publishers, but also with independent studios. It is neither possible nor desirable to own every great independent studio. We have also learned that we are not the best home for every type of studio. As we reset Xbox, we will help independent creators succeed by providing open development tools and audiences to realise their vision."