Obsidian Entertainment

Obsidian Entertainment is now under Bethesda Softworks oversight following Microsoft's September 22, 2026 Xbox reorganization, while continuing Grounded 2 and a new Fallout project co-developed with Bethesda Game Studios. The studio laid off 52 employees in July 2026 (about 25 percent of its workforce) and canceled multiple unannounced projects including Avowed 2.

Synthesized from 7 Yomimono stories · updated Oct 5

Obsidian Entertainment entered the summer of 2026 with reports of closure, retracted within days after journalists Jason Schreier and Jez Corden denied the claim. The Game Business corrected and apologized for its article on July 3. Days later, on July 9, Obsidian laid off 52 employees, about 25 percent of its workforce, as part of broader Xbox cuts. Multiple unannounced projects including Avowed 2 were canceled, and resources shifted toward a new Fallout game with Josh Sawyer expected to lead development and Bethesda Game Studios co-developing. The plan was not finalized at the time. Director Brandon Adler addressed the changes on LinkedIn, saying many of the same people from Fallout: New Vegas and Pillars of Eternity still hold key roles and the studio's core creative spirit remains unchanged.

Microsoft announced its Xbox reorganization on September 22, 2026, placing Obsidian under Bethesda's purview. Bethesda president Jill Braff told Obsidian staff the move is mainly a reporting structure change. CEO Feargus Urquhart continues to lead the studio, and Braff said current management remains in place. The Fallout series stays with Bethesda Game Studios, though Obsidian is working on a new Fallout project with that studio. Braff also said there are no plans to rework current development plans or ask teams to change their work. More details on the Fallout project are to be shared in the coming months.

Grounded 2 continues. It enters early access on PS5 on August 11, 2026, with cross-play and cross-progression across Xbox, PC, and PS5. Game director Chris Parker detailed a Buggy mount system that acts as a combat companion and inventory carrier, with an amphibious Buggy type planned for the August Into the Abyss update.

Key facts

Reporting structure: Obsidian Entertainment moves under Bethesda Softworks as part of Microsoft's September 22, 2026 Xbox reorganization. ↗
Leadership: CEO Feargus Urquhart continues to lead the studio and current management remains in place. ↗
Development plans: No plans to rework current development plans or ask teams to change their work, per Bethesda president Jill Braff. ↗
Fallout project: Obsidian is working on a new Fallout project with Bethesda Game Studios; more details to be shared in the coming months. ↗
Layoffs: Obsidian laid off 52 employees, about 25 percent of its workforce, as part of broader Xbox cuts. ↗
Project cancellations: Multiple unannounced projects including Avowed 2 were canceled, with resources redirected to the new Fallout game. ↗
Grounded 2 early access: Grounded 2 enters early access on PS5 on August 11, 2026, with cross-play and cross-progression across Xbox, PC, and PS5. ↗
Buggy mount system: A Buggy mount system functions as a combat companion and inventory carrier, with an amphibious type coming in the August Into the Abyss update. ↗
Studio identity: Director Brandon Adler said the studio has changed over 20 years but its core creative spirit remains unchanged, with key roles still held by people from Fallout: New Vegas and Pillars of Eternity. ↗

Timeline

Oct 3, 2026 Bethesda Tells Obsidian Staff Reporting Change Only After Xbox Restructure
Oct 3, 2026 Xbox Moves Halo to Activision, Shifts Studio Oversight, Cuts 268 Jobs
Jul 13, 2026 Obsidian Director Says Studio's DNA Remains the Same Despite Layoffs
Jul 9, 2026 Fallout: New Vegas and Other Obsidian Titles Discounted in Steam Summer Sale
Jul 9, 2026 Obsidian Reportedly Cancels Avowed 2, Shifts to New Fallout Game
Jul 3, 2026 Obsidian Entertainment Closure Report Retracted After Corrections
Jun 28, 2026 Grounded 2 PS5 Early Access Begins August 11, Buggy Mount System Detailed

Synthesized by Yomimono from the cited Yomimono stories below, each itself sourced, then editorially reviewed. Every fact links the story it came from.

Facts

Noted: current management including CEO Feargus Urquhart continues to lead the studio · 2026-10-03
Noted: no plans to rework current development plans or ask teams to change the work they are doing · 2026-10-03
Noted: move under Bethesda Softworks is mainly a change in reporting structure · 2026-10-03
Noted: Obsidian Entertainment director Brandon Adler responded on LinkedIn to criticism that the studio has lost its identity after recent Xbox layoffs. · 2026-07-13
Announced: layoffs of 52 employees · 2026-07-09
Announced: cancellation of Avowed 2 · 2026-07-09
Announced: redirecting resources toward a new Fallout game · 2026-07-09

Connections

Produces: avowed, fallout new vegas, grounded 2
Staff change of: xbox

Structured graph also available as JSON at /public/entities/obsidian-entertainment. CC BY 4.0.

Claim activity

When a claim about Obsidian Entertainment was confirmed, debunked, or disputed against open-web sources. The record stays even after a claim drops off the facts list.

Confirmed Obsidian Entertainment produces Avowed Sep 8 · source

All coverage

Oct 3

Bethesda Tells Obsidian Staff Reporting Change Only After Xbox Restructure

Bethesda president Jill Braff told Obsidian Entertainment employees that the studio's move under Bethesda Softworks is mainly a change in reporting structure. The Xbox division reorganization Microsoft announced on September 22, 2026 places Obsidian under Bethesda's purview. Braff said in the email that Obsidian's creativity and strengths remain at the core of the studio and its works, that current management including CEO Feargus Urquhart continues to lead the studio, and that the Fallout series stays with Bethesda Game Studios. According to the email text published by IGN, Braff also said there are no plans to rework current development plans or ask teams to change the work they are doing. Obsidian is working on a new Fallout project with Bethesda Game Studios, and Braff said more details will be shared in the coming months. Bloomberg reporter Jason Schreier reported in July that Josh Sawyer, a director on Fallout: New Vegas, is expected to lead the project.

Oct 3

Xbox Moves Halo to Activision, Shifts Studio Oversight, Cuts 268 Jobs

Microsoft announced a wide reorganization of its Xbox game studios on September 22. The next Halo game will be led by a new dedicated team at Activision, separate from the Call of Duty team, with a small group staying at Halo Studios to support existing titles and the community. Rare and World's Edge also move under Activision. Bethesda takes oversight of Obsidian Entertainment, which continues Grounded and a new Fallout project with Bethesda Game Studios. Turn 10 Studios and Playground Games merge into one studio handling Forza and Fable. King absorbs Microsoft Casual Games. Microsoft will cut 268 positions across Halo Studios, other first-party studios, and Xbox Game Studios management and shared services. Matt Booty said about three-quarters of the reorganization plan is complete. Two sale agreements for Ninja Theory fell through, and the company begins employee consultations on a closure proposal. Consultations for Arkane continue through the end of the year.

Jul 13

Obsidian Director Says Studio's DNA Remains the Same Despite Layoffs

Obsidian Entertainment director Brandon Adler responded on LinkedIn to criticism that the studio has lost its identity after recent Xbox layoffs. He acknowledged the layoffs were difficult but argued that many of the same people who worked on past titles like Fallout: New Vegas and Pillars of Eternity still hold key roles. He said the studio has changed over 20 years but its core creative spirit remains unchanged.

Jul 9

Fallout: New Vegas and Other Obsidian Titles Discounted in Steam Summer Sale

The Steam Summer Sale on Steam includes discounts on multiple Obsidian Entertainment titles. Fallout: New Vegas is 50% off at 550 yen, and its Ultimate edition is 60% off at 879 yen. Other discounted games include The Outer Worlds 2, Avowed, Pentiment, and Grounded. The sale runs until July 10 at 2 a.m. Japan time.

Jul 9

Obsidian Reportedly Cancels Avowed 2, Shifts to New Fallout Game

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.

Jul 3

Obsidian Entertainment Closure Report Retracted After Corrections

The Game Business reported that Obsidian Entertainment was a target for closure in Xbox restructuring, but the article was corrected and apologized for after journalists Jason Schreier and Jez Corden denied the claim, stating Xbox plans to keep the studio.

Jun 28

Grounded 2 PS5 Early Access Begins August 11, Buggy Mount System Detailed

Obsidian Entertainment announced that Grounded 2 will launch early access on PS5 starting August 11, 2026, with cross-play and cross-progression across Xbox, PC, and PS5. Game director Chris Parker detailed the new Buggy mount system, which functions as a combat companion and inventory carrier, and confirmed an amphibious Buggy type coming in the August Into the Abyss update.