Following Microsoft's recent layoffs at Xbox, Obsidian Entertainment has pivoted from its planned Avowed sequel to a fresh Fallout title under Xbox's renewed focus on flagship franchises. This shift aligns with Xbox’s strategy to concentrate resources on its most lucrative IPs.

Background

In early May, Microsoft announced a reduction of 3,200 jobs across the Xbox division, a move that reverberated through its game studios. Among those impacted, Obsidian Entertainment, known for titles like The Outer Worlds and Fallout: New Vegas, lost approximately a quarter of its workforce.

Obsidian’s New Mission

Bloomberg reports that Xbox has redirected Obsidian to the Fallout franchise, focusing on a brand‑new Fallout game rather than a remaster. The project will be led by studio design director and veteran Josh Sawyer, who directed the beloved Fallout: New Vegas for Obsidian.

Avowed’s Future

The highly anticipated sequel to Avowed, slated for a 2027 reveal, has been put on hold. Reports indicate development was progressing well, but the shift in priorities has forced the cancellation of multiple projects, including this sequel.

Industry Implications

Fallout remains one of Xbox’s flagship brands, especially after two successful live‑action series on Amazon Prime. Obsidian’s proven track record with the series makes it a natural fit to helm the next entry, while Bethesda focuses on The Elder Scrolls 6.