Obsidian is Allegedly Developing a New Fallout Game Following the Cancellation of Avowed’s Sequel

As Microsoft continues to streamline its Xbox game studios amid significant layoffs, the remaining teams are starting to chart their future paths. Obsidian, known for titles like Avowed and The Outer Worlds, is reportedly scrapping plans for a sequel to Avowed and shifting focus to a new Fallout game, a move that fans have been eagerly anticipating, though it comes as a surprise.

Sources indicate that studio design director Josh Sawyer will lead the development of this new Fallout title, marking Obsidian’s return to the beloved post-apocalyptic series after their successful release of Fallout: New Vegas in 2010. However, the strategy is said to be “in flux,” meaning changes could still occur. Previously, Sawyer was working on an RPG that shared structural and thematic elements with Fallout but was not set in the Bethesda universe.

A WARN Act notice has revealed that 52 employees were laid off from Obsidian’s California office, which accounts for about a quarter of the studio’s workforce. The now-canceled Avowed sequel was expected to be unveiled within the next year, but it reportedly did not align with the new strategy set by Xbox CEO Asha Sharma, likely due to Avowed not being viewed as a key franchise and the original game not meeting sales expectations.

The shift to Fallout comes at a time when a TV adaptation of the franchise is gaining popularity on Amazon’s streaming service, even as Fallout 5 remains absent from the horizon while Bethesda focuses on The Elder Scrolls VI. Under Sharma’s leadership, Xbox is reportedly aiming to accelerate the development of its core franchises, which also include Halo.

Sources suggest that Bethesda will still play a role in this new Fallout project, even as it continues its work on TES VI, which is still several years away from release.