Microsoft's broad Xbox reorganisation prompted Obsidian Entertainment to alter its development strategy, abandoning plans for an Avowed sequel to redirect resources toward a new Fallout game. The decision accompanied significant staffing reductions across Xbox divisions affecting thousands of employees, with Obsidian shedding roughly a quarter of its workforce. Josh Sawyer, a veteran designer who previously led Fallout: New Vegas, will direct the new Fallout title, which reportedly builds on work originally designed as a structurally similar but distinct intellectual property.

The reorientation represents a substantial reset for the studio's ambitions, particularly given that the shelved Avowed sequel had progressed considerably and would have launched within roughly a year. Meanwhile, the Fallout franchise remains dormant from a major release perspective, with Fallout 76 standing as the most recent mainline entry from 2018, despite the property's recent resurgence in cultural visibility through its television adaptation. Obsidian will continue supporting Grounded 2 and developing additional content for The Outer Worlds 2, though the staffing constraints suggest reduced capacity for parallel development efforts.