Obsidian Entertainment, the studio behind titles like Pillars of Eternity and The Outer Worlds, has been integrated into Bethesda Softworks as part of a broader restructuring at Xbox. Matt Booty, Xbox's chief content officer and executive vice president, announced the change, stating that Obsidian will continue its existing projects, including Grounded and a new Fallout game being developed in collaboration with Bethesda Game Studios.
This organizational shift places Obsidian under the Bethesda business unit, though it appears to be a collaborative arrangement rather than an acquisition. The structure is described as similar to the relationship between Bethesda's parent company, ZeniMax Media, and Doom developer id Software. Obsidian Entertainment previously faced significant layoffs in July, resulting in the cancellation of the Avowed sequel and a strategic pivot towards the Fallout franchise.
The exact nature of the new Fallout project remains undisclosed, with speculation ranging from a mainline entry like Fallout 5 to a spin-off. Regardless, this new title adds to the growing slate of Fallout games in development, alongside efforts from Bethesda Game Studios and potentially others.
This move is part of a larger shake-up within Xbox's gaming divisions. Other announced changes include Activision developing the next Halo title, a likely closure of Hellblade developer Ninja Theory, and the merger of the two Forza studios. Further staff reductions are reportedly anticipated before June 2027.