Obsidian Cancels Avowed Sequel for New Fallout Game

Microsoft has reportedly canceled a sequel to the fantasy role-playing game Avowed, with Obsidian Entertainment now tasked with developing a new entry in the Fallout franchise. This strategic shift is part of a broader restructuring within Microsoft's gaming division, which has led to approximately 3,200 layoffs across the Xbox organization. Obsidian Entertainment itself has seen a reduction of about 25 percent of its workforce, impacting an estimated 60 to 70 employees, including producers, writers, and programmers, some with over a decade of tenure.

Despite the significant workforce reduction and the cancellation of the Avowed sequel, Obsidian Entertainment is continuing work on other projects. Development will proceed on Grounded 2, a cooperative survival sequel currently in early access on PC and consoles, with a planned release for the PlayStation 5. This title features mechanics where players can raise and ride insect companions. Additionally, the studio is still working on announced downloadable content for The Outer Worlds 2.

The pivot to a new Fallout game and the extensive layoffs signal a major realignment for the studio, which was acquired by Microsoft in 2018. Employees at Obsidian are reportedly awaiting further guidance on how the studio's production pipeline will operate with its diminished headcount. The company's focus appears to be shifting towards its most high-priority intellectual properties in the wake of these changes.