Fallout RPG By Obsidian Reportedly Replaces Avowed 2 Amid Xbox Shakeup

Microsoft’s Xbox gaming division is making major changes under recently installed CEO Asha Sharma, leading to layoffs and a reshuffling of many projects. Even a productive studio like Obsidian hasn’t been spared, which lost 25% of its staff and has been given a new marching orders for its next game according to Bloomberg’s Jason Schreier.

The studio will be abandoning several unannounced titles and a follow up to Avowed, an RPG that it released in 2025. It will now focus on creating a new entry into the popular Fallout series that will be directed by Josh Sawyer. The name should be familiar to longtime fans as he was at the helm for Fallout: New Vegas, which is one of the most popular entries in the franchise.


This reprioritization of projects by Xbox leadership likely stems from its desire to capitalize on the success of Amazon’s adaptation of Fallout. The streaming show, which completed its second season earlier this year, has been both a critical success and a hit with subscribers. It has become one of the most popular shows on the streaming service.

While tasking Obsidian with making a new Fallout title is likely a smart move, it seems counterintuitive to have layoffs after greenlighting the new game. The studio has proven that its mastery over the years after releasing Avowed, The Outer Worlds 2 and launching Grounded 2 early access in the span of one year. This kind of output is almost unheard of in modern AAA game development.

Time will tell if this move by Microsoft ends up panning out, and hopefully it does so that the the team at Obsidian can continue its successful run.