Obsidian Entertainment has reportedly seen significant project cancellations and staff reductions as part of a broader strategic realignment by Xbox. According to a July 8 report from Bloomberg, approximately a quarter of Obsidian's staff has been laid off, and multiple projects have been terminated to allow the studio to concentrate on the Fallout franchise. One of the casualties of these cuts is the sequel to Avowed, the studio's 2025 action-RPG.
The Avowed sequel was reportedly "going well" and was on track for a potential announcement within the next year. Obsidian had intended to leverage the existing world and technology from the original game to expedite development on the follow-up. However, the project reportedly did not align with Xbox CEO Asha Sharma's strategic vision for the company.
While the cancellation appears definitive, a slim possibility remains for the sequel's revival. Bloomberg suggests that some remaining staff will continue to work on the project in the hope that Xbox might reconsider its future viability. This comes despite earlier reports from February 2026 indicating Obsidian's commitment to expanding the Avowed universe, which is also connected to a spin-off from the Pillars of Eternity series. The future of the Pillars of Eternity franchise itself remains uncertain, with no significant news since the release of Pillars of Eternity II: Deadfire in 2018.
The cancellation is a disappointing development for fans of Avowed. Although the original game did not meet Microsoft's sales expectations, it garnered generally positive reviews. GameSpot awarded it a 6/10, while it holds a "mostly positive" user rating on Steam and an 80 score on Metacritic. The game concluded with a cliffhanger, suggesting ample narrative potential for a sequel that would explore its rich world, characters, and conflicts. Players also lauded the game's magic system, with spellcasting described as feeling impactful and satisfying.
Former Avowed director Carrie Patel, who departed Obsidian in May 2025 to join Night Dive, has reportedly expressed a desire to see more of the game's universe explored, but Microsoft appears disinclined to move forward with the project at this time.