Staff at Obsidian Entertainment are reportedly expressing concern regarding the studio's future projects in the wake of substantial layoffs impacting Microsoft's Xbox division. According to Kotaku, between 60 and 70 employees were let go from Obsidian, a studio known for titles such as "Fallout: New Vegas," "Avowed," "The Outer Worlds," and "Grounded."
These cuts come as part of a broader restructuring within Xbox, which Microsoft gaming boss Asha Sharma described as the most significant in the division's history. The restructuring is expected to result in the departure of 1,600 employees immediately, with another 1,600 to follow within the current financial year. As part of these changes, four studios are transitioning to new management, and one is undergoing consultation regarding its future.
Sources within Obsidian have reportedly voiced uncertainty about how the studio's "huge list of projects" can proceed after the reductions. While Obsidian has not yet announced a new game following the commercial performance of "Avowed" and "The Outer Worlds 2," it is continuing development on the early access game "Grounded 2" and "The Outer Worlds 2" DLC.
Recent statements from Bethesda boss Jill Braff suggest a strategic shift by Xbox to concentrate on its most prominent franchises. Braff indicated that the company is moving from a model focused on individual studio roadmaps to one that prioritizes "our strongest franchises and determining the content roadmap that best serves our players and Bethesda as a whole." This approach could potentially involve assigning studios like Obsidian to support the development of existing major franchises or even new installments.
There has been persistent fan speculation about a potential "Fallout: New Vegas 2," a sentiment echoed by Obsidian's VP of operations Marcus Morgan last year. He acknowledged the constant demand for a sequel, especially with the studio's original game serving as inspiration for the second season of the Amazon TV series "Fallout."
Furthermore, questions linger about a mystery project that Tim Cain, one of the original "Fallout" creators, rejoined Obsidian to work on in December 2025. Microsoft has stated that none of its publicly announced first-party games or projects are being canceled as part of these workforce reductions, leaving the status of Cain's unannounced project unclear.