Days after Microsoft announced 3,200 job cuts at Xbox, a new Bloomberg report indicates that the fallout for developer Obsidian Entertainment extends beyond the roughly quarter of its staff reportedly lost. Xbox has apparently redirected the studio onto the Fallout franchise, in line with its stated aim of concentrating on its biggest brands. Notably, the project is said to be an entirely new Fallout game rather than a remaster, but the shift has come at a cost: Obsidian has reportedly had to cancel several projects, including a sequel to its well-received 2025 role-playing game Avowed.

According to the report, the Avowed sequel's development "was going well" and it had been due to be unveiled in 2027. The new Fallout game is said to be led by industry veteran Josh Sawyer, the studio's design director, who directed the acclaimed Fallout: New Vegas — the only non-Bethesda-developed entry in the series since Bethesda acquired the rights. One of the other cancelled projects, also headed by Sawyer, was reportedly an RPG thematically and structurally similar to Fallout. The move is seen as unsurprising given Fallout's importance to Xbox, bolstered by two successful Amazon Prime television series, while Bethesda continues to focus on The Elder Scrolls 6.