Xbox has finally commissioned Obsidian Entertainment to develop a new Fallout game, led by Fallout: New Vegas director Josh Sawyer, after laying off roughly 3,200 employees across the company, including a quarter of Obsidian's staff. According to a Bloomberg report, the decision comes years after Microsoft acquired both Bethesda and Obsidian, yet failed to leverage the New Vegas studio for the franchise until now.
Obsidian's Long-Awaited Return to Fallout
Many fans consider Fallout: New Vegas, released in 2010 by Obsidian, as the best entry in the series, surpassing Bethesda's own titles. When Microsoft acquired Bethesda and the Fallout IP in 2021, expectations were high for a New Vegas sequel or remaster. However, that never materialized. Instead, Obsidian focused on original games like Grounded 2, Avowed, and Pentiment, none of which achieved major commercial success. Of the three games Obsidian released last year, only Grounded 2's early access launch was deemed a success by Microsoft.
The new Fallout project reportedly cancels most of Obsidian's other in-development titles, including a sequel to Avowed. Bloomberg notes that Sawyer was previously directing a different role-playing game similar to Fallout but not part of the franchise. Former Obsidian designer Chris Avellone commented on X that he heard Sawyer's game was originally intended to be a Fallout title, but 'Bethesda put the kibosh on that.'
Impact of Layoffs and Project Prioritization
The decision to greenlight a new Fallout comes after Microsoft laid off approximately 3,200 employees earlier this year, with Obsidian losing an estimated 60 to 70 staff members—a quarter of its workforce. This undercuts the positive news of the Fallout project, as many affected employees had worked on the very games now being sidelined. Obsidian is still expected to work on two DLC expansions for The Outer Worlds 2 and the full launch of Grounded 2, though Bloomberg suggests the former may be cancelled.
Some employees are reportedly continuing work on Avowed 2 despite its cancellation, hoping it can be revived later. The sequel was far enough along that it could have been announced this year. However, if Xbox prioritizes only heavy hitters like Fallout, smaller critically acclaimed titles like Pentiment may never be greenlit again.
Timeline and Competition with Fallout 5
Assuming development proceeds without further changes, Obsidian's Fallout game is not expected for several years, especially if it is a full-scale role-playing game rather than a smaller spin-off. It will likely release before Bethesda's Fallout 5, as Bethesda remains focused on The Elder Scrolls 6, which reportedly won't launch until 2028 at the earliest. Xbox is banking on the continued popularity of Amazon's Fallout TV show, which is producing a third season, but there is no guarantee the series will still be airing by the time the game launches.
The move aligns with Xbox boss Asha Sharma's strategy to prioritize core franchises, but the timing raises questions about the company's commitment to its workforce and diverse portfolio.
