Obsidian Entertainment is ending work on several projects and turning its attention toward a brand new Fallout experience as Microsoft reorganizes its gaming operations. The company revealed sizable reductions across its Xbox division this week and explained that resources would move to initiatives viewed as higher priority. As a result, Obsidian is set to start development on the next entry in the Fallout series, which has not seen a mainline release since Fallout 76 arrived in 2018.

To free capacity for the Fallout project, the studio has ended multiple unrevealed efforts, among them a follow up to Avowed, according to information shared with Bloomberg. Sources close to the situation indicated that Obsidian restructured alongside the wider Xbox reductions, leaving approximately one quarter of its team affected by the job losses.

The California studio shipped three titles in the past year, Avowed, The Outer Worlds 2, and Grounded 2, and had additional games planned, one of which was Avowed 2. Development of the new Fallout game will be led by design director Josh Sawyer, who previously guided Fallout New Vegas, the well regarded spin off released in 2010.

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Avowed 2 has not been abandoned entirely. Bloomberg notes that a portion of the team will keep refining the sequel while they await the start of the Fallout project. Remaining staff will also handle post launch content for The Outer Worlds 2 and ongoing updates for Grounded 2.

Additional Fallout Titles Underway

Neither Bethesda nor Obsidian has confirmed plans for a new Fallout game. The report offered no specifics on the scope or setting of Obsidian's effort. Bethesda is also understood to have multiple Fallout projects in early stages. In 2024, director Todd Howard mentioned two separate efforts under consideration at the studio. It remains uncertain whether Obsidian will assume one of those assignments or create an original concept.

A Fallout game from Obsidian would mark the first time since 2010 that a title in the series is not led by Bethesda. After acquiring the rights from Interplay in 2007, Bethesda has delivered Fallout 3, Fallout 4, and Fallout 76, each achieving strong sales. The earlier spin off Fallout New Vegas, crafted by Obsidian under Bethesda's publishing banner, appeared between Fallout 3 and Fallout 4. Supporters have repeatedly asked for another collaboration of this kind.

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Fallout New Vegas launched in 2010
Photo Credit: Bethesda/Obsidian

TV Series Sparks Fresh Attention for the Franchise

The Fallout universe already enjoys strong popularity, yet the Amazon Prime Video adaptation has generated even greater interest. After the first season premiered, nearly five million players returned to the games in one day.

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Eight years after the most recent mainline release, Microsoft is channeling support toward flagship series such as Halo, Fallout, and The Elder Scrolls. The parent company disclosed broad layoffs affecting roughly 3,200 gaming employees this week.

Xbox CEO Asha Sharma confirmed that several studios acquired in recent years will operate independently again. Double Fine Productions and Compulsion Games will regain autonomy and keep their intellectual properties. Ninja Theory and Undead Labs have secured new backing for Senua and State of Decay 3. Arkane in France is exploring strategic alternatives.

The reductions also touch staff at Activision, Bethesda ZeniMax, Blizzard, King, Mojang, and Xbox Game Studios. Sharma stated that no previously announced first party titles will be cancelled because of the changes.