Multiple outlets report that Microsoft’s Xbox is changing Obsidian Entertainment’s development priorities amid a wider business reset and layoffs. Reports say Xbox cancels a planned Avowed sequel—often described as “Avowed 2”—and redirects the studio toward work on a new Fallout title. The shift is linked to restructuring decisions at Xbox, including investment and project prioritization toward “higher priority” areas.
Several sources also describe the impact of the restructuring on Obsidian itself. Eurogamer and NDTV report that Obsidian loses roughly a quarter of its workforce in Xbox-related job cuts. Engadget and The Verge similarly place the project changes in the context of broader layoffs and the shutdown or scaling back of multiple internal efforts across Xbox.
One additional point in the coverage is uncertainty about the fate of the Avowed sequel: while reports broadly characterize it as canceled, some discussion notes that smaller teams could keep work going depending on whether a new Fallout project later requires their involvement. Separate reporting also indicates that Bethesda is involved or informed about the new Fallout development.
