Microsoft cancels Avowed 2, redirects Obsidian to Fallout as Xbox consolidates around legacy IP
Summary
Microsoft cancelled Obsidian's Avowed sequel and moved the studio to a new Fallout game
Josh Sawyer, director of Fallout: New Vegas, will lead the project with Bethesda collaborating
60-70 Obsidian staff affected; five Xbox studios divested or transferred in the broader reset
Trigger is transmedia: Prime Video's Fallout hit sixth-most watched, spiking game sales after December premiere
"It is neither possible nor desirable to own every great independent studio"
01
Obsidian pivots from original IP to franchise execution
Avowed 2 cancelled alongside multiple unannounced Obsidian projects
A small team remains on Avowed in hopes of reviving the sequel later
Remaining staff split between Outer Worlds 2 DLC, Grounded 2 content, and the new Fallout game
Bethesda will collaborate - the first formal shared-IP development between the two Xbox-owned studios
Tim Cain, original Fallout creator, recently returned to Obsidian; involvement unconfirmed
02
Transmedia performance is now reshaping studio mandates
Fallout: New Vegas served as the setting for Season 2 of Prime Video's adaptation
The series became Prime Video's sixth-most watched of all time
Fallout game sales rose significantly after the December premiere
Bethesda has not shipped a mainline Fallout since 2018 - an eight-year gap now reactivated by TV
Microsoft is prioritizing a franchise sequel over original IP on the strength of transmedia signal
03
Microsoft Xbox restructuring releases studios that lack franchise fit
Id Software confirmed 136 layoffs; 22 cut at Bethesda Game Studios Austin
Up to half of ZeniMax Online Studios' development team reportedly impacted
Activision, Blizzard, King, Mojang, and Xbox Game Studios all saw reductions
Compulsion Games and Double Fine spin out as independents; Ninja Theory and Undead Labs enter new ownership
Arkane has started consultation proceedings
"Since 2018, we have aggressively expanded our studio portfolio while the number of games created each month across the industry now outpaces the last ten years combined"
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