Obsidian Entertainment is reportedly being steered back toward Fallout, the series that produced one of the studio's most beloved games, as Microsoft reshapes Xbox around its biggest franchises.
Bloomberg reports that Obsidian is shifting work toward a new Fallout project, with Fallout: New Vegas director Josh Sawyer reportedly set to lead it. Bethesda Game Studios is also reportedly involved, making this less a clean handoff than a collaboration inside Microsoft's RPG bench.
The reported move would be a major reversal for Fallout fans who have spent years wondering whether Obsidian would ever return to the wasteland. The studio developed Fallout: New Vegas, which launched in 2010 and has stayed central to the series' reputation because of its quest design, faction politics and player choice.
The reported pivot is tied to a painful restructuring. Bloomberg's report says Obsidian has canceled several projects, including a planned Avowed sequel, while roughly a quarter of the studio's workforce has been laid off. Separate GamesIndustry.biz reporting on Microsoft's latest cuts said Obsidian recently lost between 60 and 70 workers, part of a wider Xbox layoff wave affecting Bethesda, id Software and ZeniMax Online Studios.
A new Obsidian-led Fallout would answer one of the series' longest-running fan requests, but the project is reportedly emerging from canceled work, staff reductions and a broader plan to concentrate resources on proven brands.
The strategy fits the Xbox reset that has already put Fallout and The Elder Scrolls near the center of ZeniMax's future. It also gives Microsoft a way to shorten the wait for new Fallout content while Bethesda Game Studios remains tied to The Elder Scrolls 6. Todd Howard told IGN in 2022 that Fallout 5 was planned after The Elder Scrolls 6, a timeline that made another long gap seem likely.
Fallout is not exactly cold in the meantime. Amazon's TV adaptation helped send players back into the older games in 2024, with Game Developer reporting at the time that Steam player counts for Fallout 4, Fallout 76 and Fallout: New Vegas all surged after the show's premiere. Fallout 76 hit a new Steam peak during that wave, while New Vegas climbed far above its normal baseline.
Obsidian is not reportedly dropping everything else. The Bloomberg report says the studio will keep supporting The Outer Worlds 2 with post-launch DLC and remain involved with Grounded 2. Some developers from Avowed 2 are reportedly being reassigned while larger projects ramp up, leaving the fantasy RPG sequel's future uncertain.
No title, platforms or release window have been announced for the reported Fallout project. Microsoft, Bethesda and Obsidian have not confirmed the game, so this remains a report about Xbox's direction rather than an official reveal. If the project moves forward, Obsidian's return to Fallout would become the clearest player-facing outcome yet from Microsoft's restructuring.