Reports indicate that Obsidian Entertainment, the developer behind Fallout New Vegas, The Outer Worlds, and Avowed, could be affected by Xbox's major restructuring plans expected to be announced next week. According to Chris Dring on The Game Business podcast, Obsidian is among the studios potentially at risk, alongside Ninja Theory, Double Fine, Undead Labs, and Compulsion Games.
Xbox's 100-Day Reset Plan
Xbox CEO Asha Sharma announced after the Summer Games Showcase that the company would undergo a 'reset' period over the next 100 days. While specific details were not provided, reports suggest this could involve studio closures, sales of some studios, and staff layoffs.
Xbox acquired Obsidian Entertainment in 2018. Since then, the studio has released The Outer Worlds 1 and 2, Pentiment, Avowed, and Grounded 1 and 2, with three of those titles launching in 2025 alone, making it one of the most prolific studios under Xbox Game Studios.
Bloomberg Confirms Obsidian Not Closing
Bloomberg's Jason Schreier reported that despite the rumors, Obsidian Entertainment is not in negotiations to shut down or be sold. On BlueSky, Schreier wrote, “Despite a report this morning, I can confirm that Obsidian is *not* in negotiations to avoid shutting down. Plenty of details are still up in the air surrounding the layoffs (picture will be clear on Monday) but Xbox is keeping Obsidian, according to people familiar with the situation.” However, layoffs may still occur.
Fallout New Vegas 2: Why It Hasn't Happened
Although Obsidian developed Fallout New Vegas, the Fallout IP is owned by Bethesda. When Xbox brought both studios under Xbox Game Studios, many hoped Obsidian would return to the franchise. However, the original director of Fallout New Vegas stated on a podcast that the studio does not have the authority to make that decision.
Under Sharma's new direction, this could change. While details of the restructuring remain unclear—described internally as a 'blood bath'—there is speculation that Sharma aims to bolster major franchises and accelerate development timelines. With Amazon's Fallout TV show enjoying success, with two acclaimed seasons and a third on the way, the lack of a new Fallout game is notable, as Bethesda is focused on The Elder Scrolls 6.
Some observers suggest the restructuring might allocate resources to Obsidian to finally develop the long-awaited sequel. Xbox is expected to reveal its restructuring plans on Monday, July 6.
