Obsidian Entertainment, the acclaimed RPG studio behind The Outer Worlds, Avowed and Fallout: New Vegas, is reportedly losing around a quarter of its workforce as part of Microsoft's sweeping Xbox layoffs. According to a Kotaku report citing sources familiar with the matter, the studio was not named directly in Monday's cuts — which affected 3,200 jobs across Xbox — but is among several Microsoft-owned studios quietly impacted. The move underlines the scale of Microsoft's restructuring and its effect even on some of its most productive teams.

The report suggests between 60 and 70 roles are being cut at Obsidian, spanning artists, designers, writers, producers, programmers and QA testers, with some staff having been at the studio for over a decade. Senior figures are affected, including The Outer Worlds' art director and, unusually, the studio's only recruiter; Avowed writer Jay Turner, who also worked on Dragon Age: Origins and Mass Effect 2, described the cuts as "Microsoft sacrificial rituals" on BlueSky. As with the wider Xbox plan — where 1,600 of the 3,200 jobs go now and the rest over the coming year — most of Obsidian's cuts land in this first wave. Work on Grounded 2 will continue and further The Outer Worlds 2 DLC is planned, though little beyond that is confirmed. Obsidian, acquired by Microsoft in 2018, was due to hold an all-hands meeting to clarify next steps.