Obsidian cancels Avowed sequel as studio shifts team to a new Fallout project

Bloomberg reported on July 6 that Microsoft’s Xbox is shifting Obsidian Entertainment to a new Fallout game and canceling a planned sequel to 2025’s Avowed. The report, by Jason Schreier, said the studio is being redirected as Xbox restructures its game pipeline. The Verge followed on July 9 with a report saying the move was part of a broader Xbox reset after this week’s cuts. ### When did this move first surface? July 6 is the first date attached to the Fallout shift in the reporting surfaced publicly by Bloomberg. Schreier’s Bloomberg author page lists “Microsoft’s Xbox to Shift Obsidian Studio to New ‘Fallout’ Video Game” and says the company is also canceling a planned sequel to last year’s Avowed. (bloomberg.com) July 9 is when The Verge amplified that reporting in a story tying Obsidian’s changes to Microsoft’s wider Xbox overhaul. The Verge said Obsidian was being pivoted toward Fallout instead of Avowed as Xbox reprioritized projects. ### What exactly is being canceled at Obsidian? Bloomberg’s listing identifies one named cancellation: a planned sequel to Avowed. (bloomberg.com) The Bloomberg item does not, in the material available here, name other canceled projects individually, but The Verge said multiple projects were being cut as Obsidian was redirected. Avowed was one of Obsidian’s recent flagship fantasy RPGs, and the sequel would have extended one of the studio’s newer original properties. (theverge.com) Obsidian’s own public channels still maintain an Avowed news forum and continue to host updates for other live titles, but the company has not publicly posted a statement in the material reviewed here confirming or denying the reported sequel cancellation. (bloomberg.com) ### Why Fallout, and why now? The Verge said the redirection came as Xbox moved to prioritize established intellectual property after this week’s cuts. Bloomberg’s report placed the Fallout assignment inside a broader Microsoft gaming reorganization that has also included studio divestitures and job reductions across Xbox. Obsidian has a direct history with the series. (forums.obsidian.net) The studio’s website identifies Obsidian as the developer of Fallout: New Vegas, giving Microsoft an internal team with prior Fallout experience as it reshuffles projects. ### How does this fit into the wider Xbox layoffs? Bloomberg reported this week that Xbox planned to eliminate 3,200 jobs, or about 20% of its staff over the next year, as part of a major overhaul. (theverge.com) The same Bloomberg reporting said Xbox would divest multiple studios as it tried to spur growth in the gaming division. (obsidian.net) Game File reported that 52 Obsidian employees in California were affected in the cuts. Other outlets in the same reporting cycle described deeper reductions across ZeniMax and Bethesda operations, underscoring that Obsidian’s changes are part of a larger reordering of Microsoft’s game development business. ### What is Obsidian still publicly working on? (bloomberg.com) Obsidian’s website on July 9 continued to show live support and patch activity for existing games. The company’s news page lists a Pillars of Eternity patch dated July 6 and an earlier June 24 patch for The Outer Worlds 2. The public site does not list a Fallout project, and Microsoft has not announced one through the sources reviewed here. (gamefile.news) That leaves the Bloomberg report and The Verge’s follow-up as the clearest public account of the studio’s next major assignment as of July 9. ### What should readers watch next? Microsoft, Xbox and Obsidian are the named participants to watch for formal confirmation of the Fallout assignment or any comment on Avowed’s future. (obsidian.net) Obsidian’s news page and Xbox’s public announcements are the most likely places for the next official update, while Bloomberg and The Verge have been the outlets that first surfaced the reported shift this week. (bloomberg.com)