Obsidian Entertainment Abandons Plans for The Outer Worlds 3 Following Sales Shortfalls
In a significant development for the gaming industry, Obsidian Entertainment has confirmed that The Outer Worlds 3 will not proceed after the disappointing commercial performance of its recent major releases. This decision comes as the studio grapples with the aftermath of launching three games in a single year, with two failing to meet Microsoft's ambitious sales expectations.
A Triple Release Strategy That Backfired
Obsidian Entertainment experienced an exceptionally busy 2025, releasing three substantial titles within twelve months. The fantasy role-playing game Avowed launched in February, followed by the early access version of Grounded 2 in July, and the highly anticipated The Outer Worlds 2 in October. While this aggressive release schedule demonstrated the studio's productivity, it has ultimately proven unsustainable and counterproductive.
According to a Bloomberg interview with Obsidian head Feargus Urquhart, only Grounded 2 has been deemed a commercial success. Both Avowed and The Outer Worlds 2 significantly underperformed against Microsoft's sales targets, creating considerable tension within the development team. Urquhart described the situation candidly, stating: 'They're not disasters. I'm not going to say this was a kick in the teeth. It was more like: 'That sucks. What are we learning?''
The Complex Factors Behind the Sales Disappointment
Several interconnected factors contributed to the underwhelming performance of Obsidian's flagship role-playing games:
- Day One Game Pass Availability: Both Avowed and The Outer Worlds 2 were immediately available on Microsoft's Game Pass subscription service, which undoubtedly cannibalised traditional sales figures
- Unrealistic Expectations: Microsoft appears to have anticipated stronger performance from The Outer Worlds 2, despite the original title achieving a respectable four million sales rather than blockbuster numbers
- Market Saturation: Releasing two major role-playing games from the same studio within eight months may have divided the audience and diminished each title's individual impact
- Extended Development Cycles: The Outer Worlds 2 required six years of development, partially due to pandemic-related disruptions, creating pressure for exceptional commercial returns
Strategic Reassessment and Future Direction
In response to these challenges, Obsidian Entertainment is implementing substantial changes to its development and release strategy. The studio has firmly committed to never again releasing three games within a single calendar year, recognising the strain this places on resources and personnel.
Josh Sawyer, director of Obsidian's smaller project Pentiment, emphasised the importance of spacing releases: 'Spacing those releases helps the company manage its resources and not burn everybody out. It's not good to release three games in the same year. It's the result of things going wrong.'
Despite cancelling The Outer Worlds 3, Obsidian has teased potential future developments in the Avowed universe, though whether this means a direct sequel or a return to the Pillars of Eternity style remains uncertain. The studio appears determined to continue pursuing niche projects like Pentiment, even as it navigates Microsoft's profitability expectations.
Broader Implications for the Gaming Industry
This situation reflects wider tensions within Microsoft's gaming division, which has implemented significant job cuts and game cancellations recently. Urquhart's comments about Microsoft demanding a 30% profit margin from its Xbox division—though subsequently denied by the company—highlight the commercial pressures facing even successful development studios.
The cancellation of The Outer Worlds 3 serves as a cautionary tale about the risks of aggressive release schedules and the challenges of meeting corporate sales targets in an increasingly competitive gaming market. As Obsidian recalibrates its approach, the industry will be watching closely to see how one of gaming's most respected RPG developers adapts to these new commercial realities while maintaining its creative identity.
