Xbox Restructuring Hits Obsidian as 60–70 Staff Depart Amid Studio Shake-Up
Xbox’s “reset” made its debut yesterday, bringing with it 3,200 job cuts and a major shake-up of its studio lineup—highlighted by the sale or spin-off of Double Fine, Compulsion Games, Undead Labs, Ninja Theory, and potentially Arkane.
Double Fine and Compulsion Games were spun out to operate independently, while Undead Labs and Ninja Theory were reportedly sold to an as-yet unspecified buyer. Microsoft is also working with the French government on what to do about Arkane, since France’s labor framework can complicate workforce changes. Even with these studios likely facing downsizing down the road, the divestment process meant they were spared direct layoffs tied to this specific round.
Obsidian Entertainment Has Been Hit Hard
The cuts targeting studios that remain within the Xbox umbrella appear more direct, with multiple Zenimax-linked teams reportedly affected. Obsidian Entertainment is said to have lost 60 to 70 employees, including The Outer Worlds art director Daniel Alpert, who spent more than two decades with the studio.
Alpert addressed the situation on LinkedIn, writing that it wasn’t the result he’d wanted, but that he’s “incredibly grateful” for the time spent there. He added that Obsidian wasn’t just a workplace for him—it was where he built his career, developed long-lasting friendships, and had the chance to collaborate with some of the most talented and driven people in the industry.
As for output, Obsidian has maintained the most steady release rhythm among Xbox-owned studios, shipping six games since 2018 (seven if you include Grounded 2). Still, smaller wins such as Avowed and The Outer Worlds 2 don’t seem to align with Xbox’s current priorities.
Xbox has now confirmed the broader restructuring, stating it’s offloading some studios while also allowing others—like Double Fine—to chart their own path as independent companies.
In the meantime, Xbox has reportedly instructed Bethesda to concentrate on its biggest franchises: Fallout, The Elder Scrolls, Doom, Quake, and Wolfenstein. As you might expect, none of those properties originate from Obsidian—unless, of course, a Fallout New Vegas 2 ever gets off the ground.
Switching back to Doom, 3D Realms founder Scott Miller claims that most of id Software’s programming staff has been let go. A former Bethesda project lead also suggested that roughly 95 people were cut from id.
All of this points to the possibility that studios like Obsidian may no longer fit into Xbox’s strategic direction. The studio may also have been offered the chance to go independent if it had been directly owned by Xbox Game Studios, rather than operating under the Zenimax-Bethesda umbrella.
Either way, the hope is that this ends with a positive outcome, because losing a studio with that kind of legacy is a real drawback for both players and the industry at large.
