Avowed Sequel Canceled: Obsidian has scrapped plans for a sequel to *Avowed*, the Pillars of Eternity spin-off released in 2025. Development was reportedly progressing smoothly, with an announcement planned for 2027, but the project has been shelved to prioritize larger franchises.\n\n- **New Fallout Game in Development**: Josh Sawyer, the director of the iconic *Fallout: New Vegas*, is leading the development of a new *Fallout* title. Bethesda Game Studios will work alongside Obsidian on the project, though the exact nature of their collaboration remains unclear.\n\n- **Mass Layoffs Hit Obsidian**: Approximately 25% of Obsidian's staff (52 employees based on WARN notices) are being laid off. Sister studio id Software (*Doom*) is also cutting around half its staff (90+ employees). Outside gaming, Microsoft is eliminating another 3,200 jobs.\n\n- **Why This Matters**: The move reflects new Xbox CEO Asha Sharma's strategy to double down on proven franchises like *Fallout*, *The Elder Scrolls*, and *Doom* rather than investing in new IPs. The Amazon Prime Video *Fallout* TV series — now filming its third season — has reignited massive public interest in the franchise, making a new game a high priority for Microsoft.
Obsidian Entertainment was acquired by Microsoft in 2018, a few years before the tech giant's massive $69 billion purchase of Activision Blizzard King in 2022. The studio has long been celebrated for its deep narrative-driven RPGs, with *Fallout: New Vegas* (2010) widely regarded as one of the best entries in the series — praised for its writing, player reactivity, and systems-driven gameplay.
Since then, Obsidian has released *The Outer Worlds* (2019), *Grounded* (2022), *Pentiment* (2022), and most recently *Avowed* (2025). However, under new Xbox CEO Asha Sharma's push to "move faster" with core IPs, the studio is being redirected toward the *Fallout* franchise.
The timing is strategic. Amazon Prime Video's *Fallout* TV series has been a massive hit, driving renewed interest in the post-apocalyptic universe. The most recent mainline game, *Fallout 76* (2018), is a multiplayer survival title, and *Fallout 5* from Bethesda Game Studios is still years away — with *The Elder Scrolls 6* taking priority after *Starfield*.
This creates a gap that Obsidian is uniquely positioned to fill. The studio already has experience working with the *Fallout* IP via *New Vegas*, making it a natural choice for a spin-off or companion title.
While the strategic shift makes business sense for Microsoft, the layoffs represent a significant human toll. Obsidian is losing a quarter of its workforce, including many senior developers. Some of the original *New Vegas* team members may no longer be at the studio, raising questions about how much of that magic can be recaptured. Meanwhile, some Obsidian developers will continue working on the *Avowed* sequel in hopes it may one day be greenlit again, and the studio will also continue DLC for *The Outer Worlds 2* and content for *Grounded 2*.
Is the Avowed sequel completely dead?
Not necessarily. Reports indicate that some Obsidian developers are continuing work on the project with hopes it may be fully greenlit in the future, but for now, development has been paused and is not an active priority.
Who is leading the new Fallout game?
Josh Sawyer, the game director of *Fallout: New Vegas* and *Pentiment*, is reportedly leading development of the new *Fallout* title.
Will Bethesda be involved in the new Fallout game?
Yes. Bethesda Game Studios, the steward of the Fallout IP, will work with Obsidian on the project. It is unclear if this means direct co-development or support-level collaboration.
How many employees are being laid off at Obsidian?
Approximately 25% of Obsidian's workforce is being laid off, which amounts to 52 employees according to WARN layoff notices — 43 in-office workers in Irvine, California, and 9 remote employees.
When was the last mainline Fallout game released?
*Fallout 76* was released in 2018. Before that, *Fallout 4* launched in 2015. *Fallout: New Vegas* was released in 2010.
For Fallout Fans: This is exciting news. A new Fallout game from the studio behind *New Vegas* — led by Josh Sawyer himself — could be a return to the series' narrative-driven roots, filling the gap until *Fallout 5* arrives.
For Avowed Fans: While disappointing, the Avowed sequel isn't necessarily canceled forever. Some developers are still working on it in the background, and it could be revived depending on Xbox's future strategy.
How to Prepare: Keep an eye on official Xbox and Obsidian announcements for details on the new Fallout game. The Fallout TV series on Amazon Prime is an excellent way to get immersed in the universe while waiting.
Who This Affects Most: Xbox gamers, Fallout franchise fans, and RPG enthusiasts. The layoffs also affect the broader gaming industry, highlighting the ongoing instability even at major publishers.
Are you excited for Obsidian to make a new Fallout game, or would you have preferred to see the *Avowed* sequel instead? Do you think Josh Sawyer can recapture the magic of *New Vegas*? Share your thoughts in the comments below!
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