Obsidian Staff Worry About Fallout: New Vegas Future After Xbox Layoffs

Obsidian Entertainment staff are reportedly feeling uneasy about what comes next for the studio’s lineup, after Microsoft’s recent Xbox workforce cuts hit the company.

Key takeaways

• Microsoft’s Xbox leadership says the restructuring will cut 1,600 roles immediately and reduce another 1,600 positions during the current fiscal year.
• Obsidian is among the studios impacted, with reports indicating roughly 60 to 70 employees were laid off.
• The shake-up includes four Xbox studios moving to new leadership, while one additional studio is currently under review.
• Obsidian still has active work planned for Grounded 2 in early access and additional content for The Outer Worlds 2.
• Microsoft and Bethesda leadership messaging emphasizes a shift toward prioritizing major, established franchises rather than each studio’s next standalone plan.

Xbox restructure raises questions for Obsidian’s next steps

Yesterday, Xbox gaming chief Asha Sharma revealed what she called the most “significant” restructuring in Xbox history. The plan includes eliminating 1,600 jobs right away, with another 1,600 set to follow across the remainder of the current financial year. Alongside the layoffs, Sharma said four studios will move under new management, and one studio is entering a consultation period regarding its future.

Reports claim that Obsidian—known for first-person RPGs—was hit as part of this broader effort. Obsidian has been behind Avowed, The Outer Worlds, Grounded, Pentiment, and Fallout: New Vegas, and the studio reportedly lost around 60 to 70 people. Some of those affected are described as Obsidian veterans.

What the cuts mean for upcoming projects and franchise strategy

One quoted staff member says they are uncertain how the studio’s “huge list of projects” can continue after the business reductions. Obsidian has not announced a brand-new game since the commercial disappointments of both Avowed and The Outer Worlds 2, though work continues on Grounded 2’s early access release and on downloadable content for The Outer Worlds 2.

That uncertainty has fueled speculation about whether Obsidian could be redirected to help with another major Bethesda franchise—such as a new Fallout entry or a fresh Elder Scrolls project—or whether the studio will be tasked with supporting game development led primarily by other teams. Sharma’s public comments have suggested Xbox wants to lean harder into its biggest franchises, and Bethesda boss Jill Braff has reportedly shared similar guidance with staff.

Braff did not name specific titles, but she described a strategic shift. She said the company is “shifting from a planning model primarily centered on what’s next for each independent studio” toward a process focused on “our strongest franchises,” with the goal of building a content roadmap that best serves players and Bethesda as a whole.

She added that the organization will then “align the right talent, technology, and resources across the organization” to pursue those priorities. That naturally raises the question of whether Obsidian might be brought in to assist.

Could Obsidian return to New Vegas—and what about Tim Cain?

There’s also lingering curiosity about whether Microsoft could direct Obsidian to work on Fallout: New Vegas 2. Obsidian VP of operations Marcus Morgan previously addressed the topic, saying he knows that people on the internet will keep pointing back to the same question: when the next New Vegas is coming. Morgan’s remarks referenced Fallout: New Vegas, which has long served as a touchstone for the Amazon TV series—especially as the show’s second season is set in that same general timeframe.

Meanwhile, there are additional open questions around a mystery project involving Tim Cain. Cain, one of the original creators of Fallout, reportedly returned to Obsidian in December 2025 to work on an undisclosed endeavor. Sharma has indicated that “none of our first party publicly announced games or projects are being cancelled” as part of these reductions, but Cain’s current project is still unannounced.