Microsoft has shifted Obsidian Entertainment away from its planned "Avowed" sequel and redirected the studio toward a brand new "Fallout" game, according to a report from Bloomberg.
The move is part of Xbox's broader restructuring effort, which has already resulted in widespread layoffs and studio closures this week.
Xbox Pushes For New 'Fallout' Game From Obsidian
Digital Trends reported that "Fallout: New Vegas" director Josh Sawyer, one of the most respected names associated with the "Fallout" franchise, is attached to this new game that is now being pushed by Microsoft.
His work on "Fallout: New Vegas," which released back in 2010, is widely regarded by fans as one of the best entries in the series, praised for its writing, world-building, and player choice systems.
Bloomberg reported that Sawyer had previously been leading development on an original RPG with similar themes and structure to "Fallout," but that project has now been officially replaced by a proper new entry in the franchise.
Bethesda Game Studios is also reported to be collaborating with Obsidian on the new game, marking an unusual pairing between two studios that have historically operated separately within the Xbox umbrella.
Bethesda has not released a major new "Fallout" title since "Fallout 76" launched back in 2018, meaning the franchise has gone nearly eight years without a mainline release.
The timing is notable given that Amazon's "Fallout" TV series is currently filming its third season, keeping the franchise in the public spotlight and making a new game announcement potentially more impactful than it might have been a few years ago.
Obsidian Cancels 'Avowed' Sequel Because Of It
The new "Fallout" project comes at a direct cost to "Avowed" fans as Bloomberg said that Obsidian had been making strong progress on a sequel to "Avowed," with an official announcement supposedly planned within the coming year.
Despite that momentum, the project was canceled after it did not align with Xbox CEO Asha Sharma's strategy of concentrating resources on Microsoft's largest and most recognized franchises.
"Avowed" launched last year on Windows and Xbox, and received a generally solid reception, canceling its follow-up a sting for both the development team and players who had been hoping for more of that world.
It now joins a growing list of Xbox projects that have been shelved or shut down entirely as part of the ongoing restructuring.
Microsoft and Xbox's Restructuring
This week's events at Xbox represent one of the most sweeping reorganizations the platform has seen in years.
Alongside the "Avowed" sequel cancellation, the restructuring includes the confirmed closure of Arkane Studios Lyon and the cancellation of "Marvel's Blade," while studios like Ninja Theory, Double Fine, Compulsion Games, and Undead Labs have also been named in reports as potentially at risk.
Microsoft's stated goal is to concentrate investment around its biggest tentpole franchises, which now clearly include "Fallout" alongside properties like "Halo," "Gears of War," and "The Elder Scrolls."
The strategy mirrors how Xbox CEO Asha Sharma has spoken publicly about the platform's direction, emphasizing a focus on hardware and key intellectual properties rather than maintaining a wide spread of mid-tier projects.
