Obsidian Entertainment has canceled multiple internal projects, including a planned sequel to Avowed, to begin development on a new entry in the Fallout franchise. According to a Bloomberg report by Jason Schreier, the strategic pivot is part of a major restructuring effort directed by Xbox leadership. Alongside these project cancellations, approximately one-quarter of Obsidian’s workforce has been laid off as the studio aligns with Microsoft’s new directive.
Josh Sawyer, who directed the critically acclaimed Fallout: New Vegas in 2010, has reportedly been tapped to lead the unannounced title. The development will be a collaborative effort, with Obsidian working alongside franchise stewards Bethesda Game Studios. This marks a significant reunion for the IP, as fans have spent over a decade calling for Obsidian to return to the post-apocalyptic RPG universe.
The sudden realignment comes under the direction of Xbox CEO Asha Sharma, whose current strategy focuses heavily on maximizing Microsoft’s most lucrative gaming intellectual properties. While Avowed 2 was reportedly progressing well internally before its cancellation, corporate priorities have shifted toward franchises with proven, massive global audiences. Fallout has recently seen a massive surge in relevance, driven by the success of the Amazon Prime television adaptation.
The television series introduced millions of new viewers to the franchise, resulting in record-high player counts for older titles like Fallout 4, Fallout 76, and New Vegas. With Bethesda Game Studios fully occupied with the ongoing support of Starfield and the lengthy development of The Elder Scrolls 6, Xbox lacked a mainline Fallout game to capitalize on this cultural momentum. By shifting Obsidian onto the brand, Microsoft looks to address the lack of a new mainline release since 2018.
