Xbox Reportedly Has Obsidian Entertainment Working on New Fallout Game

Obsidian Entertainment, one of the various studios impacted by the dramatic Xbox layoffs announced earlier this week, has reportedly started shifting its resources towards the development of a new Fallout game. Obsidian’s design director Josh Sawyer has reportedly been tasked with the development of this new Fallout game with the support of Bethesda, which also continues to work on new content for the multiplayer game Fallout 76.

Bloomberg’s Jason Schreier just detailed the impact of the big Xbox reset on one of Xbox’s most prolific studios in recent years. Since its acquisition by Microsoft back in 2018, Obsidian released Grounded, Pentiment, Avowed, The Outer Worlds 2, and Grounded 2. However, both The Outer Worlds 2 and Avowed failed to meet sales expectations.

While DLCs for The Outer Worlds 2 are still coming, the new Xbox leadership team decided to cancel a sequel to Avowed. “Progress on the sequel was going well, and it was on track to be announced within the next year. But in the end, it did not fit into Sharma’s overall strategy,” Schreier explained, citing people familiar with the game’s development.

After spinning off Compulsion Games, Double Fine, Ninja Theory, and Undead Labs, the Xbox team made it clear that it wanted to focus on its biggest gaming franchises, and that clearly includes Fallout. Despite the Fallout TV series receiving critical acclaim and getting a third season soon, there hasn’t been a new Fallout game since the release of Fallout 76 back in 2018.

Obsidian previously released the fan-favorite Fallout New Vegas episode back in 2010. However, while many Fallout fans may be hoping for a “New Vegas 2”, there are no more details about this new Fallout game at the moment. “The emerging strategy is still in flux, the people said, and could still change,” Schreier said.

“Some Obsidian employees will continue working on the Avowed sequel as they wait for new projects such as Fallout to be ready, perhaps in hope of one day reviving the game,” sources also told Schreier. The reporter also said that Obsidian had to cancel “other unannounced projects” following the restructuring of Microsoft’s Xbox division.