Microsoft Restructures Xbox, Obsidian Shifts to New Fallout Game

In a move that signals a major shift within Microsoft's gaming division, Xbox is reportedly initiating a large-scale “reset.” This initiative is expected to involve significant layoffs, affecting approximately 3,200 employees. Alongside workforce adjustments, the company appears to be re-evaluating its studio investments, aiming to concentrate on projects deemed of higher priority.

As part of this strategic pivot, Obsidian Entertainment, the acclaimed studio behind titles such as Grounded and The Outer Worlds, is said to be altering its development roadmap. According to reports, Obsidian has canceled multiple ongoing projects, including a sequel to their recent RPG, Avowed. Instead, the studio is now slated to begin work on a new installment in the popular Fallout series.

This decision comes at an interesting time for the Fallout franchise. Despite the immense success and critical acclaim of the recent Fallout TV adaptation on Amazon Prime Video, which is already gearing up for a third season, the gaming side of the franchise has been relatively quiet. The last new game release, Fallout 76, arrived back in 2018. The shift to a new Fallout title under Obsidian’s guidance could be a significant move to capitalize on the renewed interest in the universe.

Josh Sawyer, who holds the position of studio design director at Obsidian, is reportedly set to lead the development of this new Fallout project. While details remain scarce, the prospect of Obsidian, known for its strong narrative and RPG design, taking the reins of a flagship franchise like Fallout is generating considerable excitement among fans. This strategic realignment within Xbox aims to streamline operations and focus resources on key intellectual properties, with the Fallout franchise appearing to be a central pillar of that future vision.