The Fallout: New Vegas developer faces impacts from Microsoft’s Xbox layoffs.
Obsidian Entertainment, known for the Pillars of Eternity series, The Outer Worlds, and Fallout: New Vegas, is undergoing restructuring as part of Xbox’s broader reset and widespread layoffs across Microsoft’s gaming division. Bloomberg reports that several of the studio’s projects have been scrapped, including a sequel to Avowed, and that Obsidian will now concentrate on developing a new Fallout title.
Josh Sawyer, who directed Fallout: New Vegas and the medieval adventure game Pentiment, is said to be leading the new Fallout effort. Bloomberg previously noted that Microsoft aims to steer its studios toward proven franchises such as The Elder Scrolls, Doom, Wolfenstein, and Fallout. The push for a fresh Fallout game is especially timely, given that Fallout 76—a 2018 multiplayer survival title—remains the series’ most recent release, and the franchise has recently gained popularity through a successful Amazon Prime Video adaptation.
The strategic shift coincides with workforce reductions. Bloomberg indicates that Obsidian is laying off roughly a quarter of its staff. According to WARN notices cited by Game File, the studio is cutting 52 employees—43 based at its Irvine, California office and nine remote workers in the same state. Meanwhile, sister Xbox studio id Software, the team behind Doom, is reportedly shedding about half of its workforce, exceeding 90 positions, per Game File. Outside of gaming, Microsoft is also eliminating an additional 3,200 jobs.
Microsoft acquired Obsidian Entertainment in 2018, a few years prior to its 2022 acquisition of Activision Blizzard King. The ongoing layoffs across Xbox and its studios form part of new Xbox CEO Asha Sharma’s effort to stabilize Microsoft’s struggling gaming business, although large‑scale staff cuts often hinder rather than help the creation of quality games.
