In a sweeping restructuring, Xbox cut about a quarter of Obsidian Entertainment's workforce and scrapped the sequel to the acclaimed 2025 RPG ‘Avowed’. The focus now shifts to the Fallout franchise, though a few developers still hope the project can be revived.
Microsoft’s gaming arm Xbox has intensified its corporate reset, dealing a heavy blow to developer Obsidian Entertainment. According to Bloomberg’s July 8 report, the California studio dismissed roughly 52 employees and halted several projects, most notably the sequel to the high‑fantasy action‑RPG Avowed, which debuted in February 2025.
Background and Avowed’s Reception
‘Avowed’ arrived to generally favorable reviews, earning an 80 Metacritic score and a "mostly positive" rating on Steam. GameSpot gave it a modest 6/10, but many players praised its blend of gunplay, melee combat, and a richly crafted magic system. While sales fell short of Microsoft’s expectations, the title cultivated a dedicated fanbase eager for more content.
Layoffs and Project Cancellation
Under CEO Asha Sharma, Xbox is consolidating its portfolio around larger franchises, with Fallout taking precedence. Bloomberg noted that the Avowed sequel was "going well" and slated for announcement the following year, yet it did not align with the new strategic direction. Consequently, the sequel was officially cancelled and the development team was reshuffled.
Potential for Revival
Despite the cancellation, Bloomberg indicates that a subset of the remaining staff will continue to nurture the Avowed sequel in hopes that Xbox might reconsider its value proposition. A February 2026 report suggested Obsidian would still explore games set in the Avowed universe, which shares lore with Pillars of Eternity. However, the latter franchise remains in limbo, with its last major release, Pillars of Eternity II: Deadfire, dating back to 2018 and receiving little news since.
Community Reaction
Fans reacted with disappointment. The original game ended on a cliffhanger, leaving ample narrative threads for a sequel. Former director Carrie Patel, who departed for Netflix‑owned Night Dive in May 2025, expressed a desire to see the story continue, but Microsoft’s shifting priorities have stalled those hopes.
In sum, Xbox’s strategic realignment has left Obsidian’s Avowed sequel in uncertainty, highlighting the tension between corporate profitability and creative ambition in the modern gaming industry.
