Obsidian Entertainment reportedly cancels Avowed 2 to develop Fallout game
Obsidian Entertainment is undergoing a major reorganization that includes the reported cancellation of an Avowed sequel and a shift to a new Fallout project.
Obsidian Entertainment is undergoing a significant operational shift as part of a wider reorganization within Microsoft’s Xbox division. Reports indicate that the studio has cancelled its planned sequel to Avowed, an action that coincides with the loss of approximately one-quarter of the developer’s workforce.
Strategic Realignment
The decision to halt development on the Avowed follow-up comes as Xbox CEO Asha Sharma implements a company-wide reset
of the business. According to reporting by Dexerto and Ign, this restructuring aims to streamline operations by divesting studios and prioritizing investment in the company’s largest gaming franchises.
Media additions
While the Avowed sequel was reportedly in development and had been on track for a potential announcement within the next year, the project was deemed misaligned with the new strategic focus. Beebom notes that a small skeleton crew may remain attached to the project, leaving open the possibility of a revival if future conditions change. Similarly, Shacknews reports that while employees were informed that all current projects were under re-evaluation, work on existing content for The Outer Worlds 2 and Grounded 2 is expected to continue for the time being.
Return to the Wasteland
The primary result of this redirection is a new entry in the Fallout series, a project that will be led by Obsidian studio design director Josh Sawyer. Sawyer previously directed the 2010 title Fallout: New Vegas, which Digitaltrends highlights as one of the most popular entries in the franchise.
Before the shift in priorities, Sawyer had reportedly been leading development on an original, unannounced role-playing game that shared structural and thematic DNA with the Fallout series. That project has now been shelved in favor of this official return to the franchise. The new title will be developed in collaboration with Bethesda Game Studios, the organization that has overseen the series for nearly two decades.
Recent Developments in Context
- Project Status: Avowed 2 is reportedly cancelled, with limited staff retained; a new Fallout project is in development.
- Leadership: Josh Sawyer, director of Fallout: New Vegas, is leading the new project.
- Collaborators: Bethesda Game Studios will work alongside Obsidian Entertainment.
- Impact: Approximately 25% of the studio's workforce was let go as part of broader cuts totaling 3,200 jobs across the Xbox division.
Conflicting Perspectives
The landscape of the studio’s internal operations remains complex. While Shacknews cites claims from Obsidian co-founder Chris Avellone, who maintains that expansions for The Outer Worlds 2 and the Avowed sequel are still in progress and were merely being re-pitched, this conflicts with the broader consensus reported by other outlets. Obsidian and Microsoft have not yet issued a formal statement regarding the specific status of these titles or the details of the restructuring plan.
As the studio navigates these changes, the prospect of a new, single-player Fallout entry—the first of its kind since the release of Fallout 76 in 2018—has emerged as a central point of interest. With Bethesda Game Studios currently occupied with long-term development of The Elder Scrolls 6, the collaboration between the two teams serves as a means for Xbox to utilize its established intellectual property more aggressively.
Observers are currently tracking the situation for further confirmation from Microsoft regarding the scope of these cancellations. No specific release window or setting for the Fallout project has been confirmed, and as noted by Beebom, the volatile nature of the current restructuring means that current plans may still be subject to further adjustment.
