The world of Xbox was shaken Tuesday with the announcement of a massive “restructuring” by the company’s new CEO Asha Sharma. This will result in over 2,000 layoffs in the next year and the closure or selling off of several subsidiary studios. But on a granular level, the studios that will stick around found themselves shifted to new projects. One of those is Obsidian Entertainment, who in addition to laying off a quarter of its workforce, will, according to Bloomberg, take over development of the next Fallout game.
Microsoft has taken Obsidian off of planned sequel to the 2025 roleplaying game Avowed along with other unannounced projects. Obsidian’s Josh Sawyer, the studio’s design director, will take over Fallout‘s next installment. While Bethesda owns the rights to Fallout and have produced most of the games since obtaining the IP, they haven’t made all of them. The last Fallout game Bethesda didn’t develop was 2010’s Fallout: New Vegas. You know who did develop it? Obsidian Entertainment, directed by Josh Sawyer. And everyone loves that game!
Fallout, hot off the success of the Prime Video series, remains one of Xbox’s biggest properties. But, even so, the most recent game to come out was 2018’s Fallout 76. Seeing as New Vegas featured prominently in season two of the series, and it remains one of the most beloved in the franchise, putting Sawyer and Obsidian in charge is a smart choice. Even if borne out of draconian corporate cuts.
Obsidian’s previous games include the action role-playing series The Outer Worlds and fantasy ARPG Avowed. Both Avowed and The Outer Worlds 2 released in 2025 and, despite mostly positive reviews, failed to meet Xbox Game Studios’ sales goals. Still, the studio was working apace on an Avowed sequel. Bloomberg reports, “it was on track to be announced within the next year. But in the end, it did not fit into Sharma’s overall strategy, according to people familiar with the game’s development.”
Kyle Anderson is the Senior Editor for Nerdist. He hosts the weekly pop culture deep-dive podcast Laser Focus. You can find his film and TV reviews here. Follow him on Letterboxd.