Obsidian developing new Fallout game as Avowed 2 is cancelled
Obsidian Entertainment has pivoted to a new Fallout project under director Josh Sawyer following the cancellation of the Avowed sequel. This shift is part of a wider Xbox restructuring that includes significant workforce reductions at the studio.
Obsidian Entertainment is shifting its development focus toward a new entry in the Fallout franchise, a strategic pivot that follows the cancellation of a planned sequel to the 2025 role-playing game Avowed. This development is part of a broader corporate restructuring at Xbox, which has recently implemented significant workforce reductions across its studios.
According to reporting from Bloomberg, the new Fallout project is set to be led by Josh Sawyer, who previously served as the project director for 2010’s Fallout: New Vegas. Prior to this shift in mandate, Sawyer was reportedly directing an original role-playing game that shared structural and thematic elements with the Fallout series but existed as a separate intellectual property. That project has now been shelved in favor of a return to the Wasteland.
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The Xbox Restructuring Context
The decision to reprioritize Fallout comes amid a wide-ranging business "reset" directed by Xbox leadership. Reports confirm that Obsidian Entertainment has parted ways with approximately 25 percent of its workforce. This reduction aligns with a larger corporate trend; Xbox is reportedly in the process of cutting 3,200 jobs throughout the current fiscal year. The strategic goal, according to reports by Dexerto and Forbes, is to streamline operations and dedicate resources to the company's most commercially viable and recognizable franchises.
The cancellation of Avowed 2 is a noted consequence of this initiative. While the original title was released in 2025, sources including Ign and GamesRadar indicate that development on the sequel was progressing until the recent restructuring rendered it incompatible with the company's new focus. Despite the cancellation, some staff members reportedly remain attached to the project, leaving open the theoretical possibility of a revival if future conditions change.
Strategic Implications for the Fallout Brand
The move to assign an Obsidian-led project to the Fallout brand addresses a long-standing gap in new, single-player entries for the franchise. While the Fallout live-action television series has generated significant viewership and critical praise, there has not been a new mainline single-player entry since 2015. Bethesda Game Studios, which currently oversees the franchise, remains focused on the development of The Elder Scrolls VI, a project that is not expected to release for years.
Market observers suggest the shift is a response to the success of the Fallout intellectual property on streaming platforms and a desire to maximize its presence in the gaming sector. Wccftech notes that this approach mirrors a broader directive from Xbox management to avoid extended periods of inactivity for its premier intellectual properties.
Summary of Studio Project Status
| Project | Status |
|---|---|
| New Fallout RPG | In development (Led by Josh Sawyer) |
| Avowed 2 | Cancelled (Workforce reduced) |
| The Outer Worlds 2 | Continuing support |
| Grounded 2 | Continuing development |
While fans have frequently requested a successor to Fallout: New Vegas, analysts caution that players should expect a lengthy wait for this new title. Xbox and Obsidian Entertainment have declined to provide official comment regarding the specific details of the project or the cancellation of other titles.
Beyond the change in project focus, Obsidian continues to manage existing commitments. The studio remains dedicated to ongoing content for The Outer Worlds 2 and the development of Grounded 2. For now, the studio faces a period of recalibration as it integrates the Fallout project into its immediate future, balancing the mandate from Xbox leadership against the loss of a significant portion of its staff and previous development plans.
