Obsidian Reportedly Pivots to a New Fallout Game Under Josh Sawyer Amidst Xbox Layoffs

If you’ve been holding out hope for a true spiritual successor to Fallout: New Vegas, the wasteland might finally be calling your name again. Obsidian Entertainment is reportedly shifting its focus to a brand-new Fallout game, with industry veteran Josh Sawyer tipped to lead the project.

However, this bittersweet announcement arrives on the heels of devastating Xbox layoffs that resulted in the cancellation of several major titles—including a highly anticipated sequel to the 2025 fantasy RPG Avowed.

Here is a complete breakdown of what is happening behind the scenes at Obsidian, what it means for the Fallout franchise, and how Microsoft’s massive restructuring is reshaping the studio.

Devastating Xbox Layoffs Hit Obsidian Hard

According to a recent report from Bloomberg, Microsoft’s aggressive restructuring has taken a heavy toll on Obsidian Entertainment. A California WARN notice confirmed that 52 employees were recently let go, effectively wiping out roughly 25% of the studio’s total workforce.

To accommodate this drastically reduced headcount, Obsidian was forced to gut its upcoming development slate to consolidate resources. Several unannounced games were put on the chopping block, but the biggest casualty is undoubtedly the Avowed sequel.

Set in the rich Pillars of Eternity universe, Avowed was a massive milestone for the studio when it launched. The immediate cancellation of its follow-up is a tough pill to swallow for fans who were eager to see the franchise expand.

Josh Sawyer Returns to the Wasteland

With its fantasy slate seemingly shelved, Obsidian is reportedly returning to its post-apocalyptic roots.

For the Fallout community, the involvement of Josh Sawyer is the ultimate selling point. As the lead designer and game director behind Fallout: New Vegas—widely regarded by fans as the pinnacle of modern Fallout storytelling and role-playing mechanics—gamers have spent over a decade begging for him to take the helm of a new entry.

While Sawyer has previously mentioned he would be open to directing another Fallout game if Microsoft gave him the green light on his own terms, the current situation is far from ideal. Leading a massive new AAA project right after losing a quarter of your team is a daunting task. It remains to be seen how the recent cuts will impact team morale and overall development speed.

What to Expect Moving Forward

Because the situation is still fresh, reports indicate that Obsidian’s internal plans remain “in flux.” Timelines and scopes could easily shift as the studio regroups and figures out how to tackle a massive franchise like Fallout with a heavily reduced staff.

Key Takeaways from the Report:

• The Project: A new Fallout title is reportedly in the early stages at Obsidian.
• The Director: Josh Sawyer (Fallout: New Vegas, Pentiment) is slated to lead development.
• The Cost: The Avowed sequel and multiple unannounced games were cancelled to make room.
• The Impact: Obsidian lost roughly 25% of its staff (52 employees) during the recent Xbox mass layoffs.

If you want to experience what Josh Sawyer and the team at Obsidian can do when they have total creative freedom, now is a great time to check out Pentiment. The incredibly well-crafted, narrative-driven historical RPG highlights exactly why Obsidian is so highly regarded in the industry—and why a new Fallout game from them is such a big deal.