Obsidian Reportedly Cancels Avowed 2, Shifts to New Fallout Game
The shift from a new IP like Avowed to a proven franchise like Fallout, under the original New Vegas director, signals Xbox's strategic focus on legacy titles over original projects during its restructuring.
Key Facts
- Obsidian Entertainment laid off 52 employees, about 25% of its workforce.
- The sequel to Avowed, tentatively titled Avowed 2, was canceled.
- The studio is shifting to develop a new game in the Fallout series.
- Josh Sawyer, who directed Fallout: New Vegas, is expected to lead the new Fallout project.
- Bethesda Game Studios is expected to co-develop the new Fallout game, though the plan is not finalized.
Reporting from 3 sources: 4Gamer.net, Automaton, Game Spark.
Obsidian Entertainment has laid off 52 employees, about 25% of its workforce, as part of a broader Xbox restructuring. Multiple unannounced projects, including the sequel to the fantasy RPG Avowed, have been canceled. The studio is now redirecting resources toward a new game in the Fallout series, with Josh Sawyer, the director of Fallout: New Vegas, expected to lead development. Bethesda Game Studios is slated to co-develop the project, though the plan is not yet finalized. The layoffs and cancellations follow Microsoft's July 6 announcement of 4,800 company-wide cuts, with 1,600 in the Xbox division. Bloomberg reported that Avowed 2 was progressing smoothly and an announcement was expected within a year. The new strategy prioritizes major franchises, and the Fallout IP is considered a key asset. Other projects, such as downloadable content for The Outer Worlds 2 and Grounded 2, will continue. Obsidian has a deep history with the Fallout series, including the return of writer John Gonzalez in January 2025 and the involvement of co-creator Tim Cain in an unannounced title.
Obsidian Entertainment laid off 52 employees, roughly a quarter of its staff, following Microsoft's July 6 restructuring that cut 4,800 jobs company-wide. The sequel to the action RPG Avowed, tentatively titled Avowed 2, was canceled despite reportedly progressing smoothly toward an announcement within a year. The studio is now pivoting to develop a new Fallout game, with Josh Sawyer-who directed the fan-favorite Fallout: New Vegas-expected to lead the project. Bethesda Game Studios is scheduled to co-develop the title, though the arrangement remains fluid. Other projects, including downloadable content for The Outer Worlds 2 and Grounded 2, are continuing development. The pivot comes after Obsidian CEO Feargus Urquhart told Bloomberg that sales of Avowed and The Outer Worlds 2 underperformed relative to Microsoft's targets. The studio has a strong Fallout pedigree: writer John Gonzalez returned in January 2025, and co-creator Tim Cain was reportedly involved in a prior unannounced project. The new Fallout game is now likely to bring many of those developers together under Sawyer's direction.
Synthesized by Yomimono from the 3 cited sources below, including Japanese-language reporting where cited, then editorially reviewed before publishing.