Overview
- Microsoft confirmed a major Xbox restructuring that includes 1,600 layoffs now, another 1,600 planned, and the divestment or transfer of several first‑party teams.
- Obsidian internally cancelled multiple projects, including Avowed 2, even though reporting says a small skeleton crew is still continuing limited work on the sequel in hopes it can be revived.
- Reporting from Bloomberg and others says Obsidian is being refocused onto a new Fallout title that will be shepherded by design director Josh Sawyer in the early stages of development.
- Studio leadership publicly acknowledged the layoffs, described the week as difficult for staff, and pushed back at speculative online commentary about Obsidian’s culture and future.
- The shift marks a wider Xbox strategy change away from broad experimentation on Game Pass toward concentrating resources on tentpole franchises, a move that could speed release timelines but hurt morale and creative breadth across studios.