Obsidian Entertainment Faces 25% Staff Reduction Amid Xbox Layoffs

In a significant restructuring move, Xbox has reportedly laid off about 25% of the team at Obsidian Entertainment, the studio known for titles like Avowed, The Outer Worlds, and Pentiment.

Sources indicate that approximately 60 to 70 employees were affected, spanning various roles including producers, artists, designers, programmers, QA testers, and writers who contributed to Obsidian’s impressive lineup of recent games. Many of those let go were senior staff members, with some boasting over a decade of experience at the studio. Notably, the art director for The Outer Worlds and the studio’s sole recruiter were among those impacted.

The majority of these layoffs occurred on July 6, as part of Xbox’s broader initiative to reduce its workforce by 1,600 positions. A few employees were informed that their layoffs would take place later in the year during a subsequent round of cuts. Remaining staff have expressed uncertainty about how ongoing projects will proceed with such a significant reduction in personnel, especially given the extensive list of upcoming projects the studio has in development.

While work on Grounded 2, currently in early access, and the announced DLC for The Outer Worlds 2 is expected to continue, future plans remain uncertain. Employees anticipate more information during a studio-wide meeting scheduled for July 7.

Obsidian Entertainment, founded in June 2003 by former Black Isle team members, has built a strong reputation over its 23 years for a variety of beloved titles, including Star Wars: Knights of the Old Republic II: The Sith Lords, Neverwinter Nights 2, Alpha Protocol, Fallout: New Vegas, and the Pillars of Eternity series. Since being acquired by Microsoft in 2018, the studio has launched The Outer Worlds 1 and 2, Grounded 1 and 2 (in early access), Avowed, and Pentiment.

Pentiment debuted in 2022, earning a Peabody Award and the Game Developers Choice award for best narrative. The Outer Worlds, released in 2019, garnered multiple accolades, including Game of the Year at the New York Game Awards and RPG of the Year at the DICE Awards, along with a Nebula Award for game writing.