Xbox has finally commissioned Obsidian Entertainment to develop a new Fallout game, but the decision comes after laying off a quarter of the studio's workforce. According to a Bloomberg report, the project is led by Josh Sawyer, who served as project director and lead designer on Fallout: New Vegas, widely considered the best entry in the series.
Obsidian's History with Fallout
Many fans credit Fallout: New Vegas as the pinnacle of the franchise, despite being developed by Obsidian rather than Bethesda. When Microsoft acquired Bethesda and the Fallout IP in 2021, expectations were high for a New Vegas sequel or remaster. However, that never materialized. Obsidian has since released several solid games under Microsoft, but none achieved blockbuster sales. Of the three games Obsidian launched last year, only Grounded 2's early access was deemed a success by Microsoft.
Layoffs and Project Cancellations
Xbox laid off roughly 3,200 people, including many Obsidian employees. The studio was reportedly working on at least four projects, including a sequel to Avowed, but most have been cancelled to focus on the new Fallout game. The layoffs at Obsidian are estimated to affect 60 to 70 staff members, representing a quarter of the workforce.
Interestingly, 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, claiming that Sawyer's game was originally intended to be a Fallout title but "Bethesda put the kibosh on that." If true, this reinforces the perception that Bethesda is jealous of New Vegas's acclaim.
Development and Release Timeline
It's likely Sawyer's new Fallout will be what he originally intended, with Microsoft overriding Bethesda. This would explain conflicting reports: VGC's Jordan Miller claimed Obsidian was already in early stages of a Fallout project last week, while Bloomberg's Jason Schreier denied this. Xbox boss Asha Sharma has prioritized core franchises, but if development is just starting, the game won't be ready for several years, especially as a proper RPG rather than a smaller spin-off.
Assuming Xbox doesn't change its mind, the game should launch before Fallout 5, as Bethesda continues to prioritize The Elder Scrolls 6, which reportedly won't release until 2028 at the earliest. Xbox is likely banking on the popularity of Amazon's Fallout TV show, now in production for a third season, but there's no guarantee the show will still be airing by the time Obsidian's game launches.
Impact on Other Projects
Obsidian is still expected to work on two DLC expansions for The Outer Worlds 2 and the full launch of Grounded 2, though the former may be cancelled. Some employees continue work on Avowed 2 despite its cancellation, hoping it can be revived later. However, if Xbox focuses solely on heavy hitters like Fallout, smaller games like Pentiment may never be allowed, despite Pentiment being one of the most critically acclaimed Xbox exclusives of this generation.
