Obsidian Director Rebukes Misinformation After 52 Layoffs as Xbox Reset Hits Studio

Q: With Avowed 2 cancelled for a new Fallout, is Obsidian's creative DNA being rewritten by Microsoft's financial demands?

Yes—at the strategic level, Microsoft’s financial reset is clearly reshaping what Obsidian makes, even if the studio’s internal creative identity has not been erased. The strongest evidence is the reported cancellation of an *Avowed* sequel and the pivot to a new *Fallout*. That move fits Xbox’s broader restructuring: 3,200 job cuts across the division, a stated need to improve weak margins, and a shift toward “tentpole” franchises with more reliable commercial returns. Obsidian’s own recent sales picture also matters. *Grounded 2* reportedly performed well, but *Avowed* and *The Outer Worlds 2* fell short of expectations, making a franchise-led pivot easier for Microsoft to justify. That does not fully support the claim that Obsidian has become “not who they used to be.” Brandon Adler’s defense is important: many of the same leads and directors behind *Fallout: New Vegas*, *Pillars of Eternity*, *The Outer Worlds* and earlier Obsidian RPGs remain in place. If Josh Sawyer is indeed central to the new *Fallout*, the project would draw directly from one of Obsidian’s most established creative lineages rather than replace it with something alien. What is changing is not necessarily the studio’s storytelling DNA, but its room to choose. Microsoft appears to be narrowing Obsidian’s options toward safer, bigger IP with clearer revenue potential. So the studio’s creative core may survive, but its autonomy is being constrained by financial demands.

3 articles · Updated · Video Games Chronicle · Jul 13

Brandon Adler said Obsidian had endured an “extremely difficult week,” mourning colleagues after 52 job cuts and attacking online commentators he called “cold take artists” for misrepresenting the studio.
Adler argued critics wrongly claim Obsidian is no longer the same company, saying many current leads and directors are the same developers behind The Outer Worlds, Pillars of Eternity and Fallout: New Vegas.
California WARN filings show 43 of the cuts were at Obsidian’s California offices and nine affected in-state remote workers, part of Microsoft-owned Xbox’s broader layoffs affecting thousands.
The backlash comes as Obsidian faces scrutiny over its pipeline: Bloomberg previously reported Grounded 2 was a hit, while Avowed and The Outer Worlds 2 fell short of sales expectations and an Avowed sequel was canceled.