Obsidian Entertainment loses staff: impact on games and projects

In short

• Obsidian Entertainment has lost around 25% of its staff due to layoffs at Xbox.
• Around 60-70 employees were affected, including producers, artists, and writers.
• Despite the layoffs, work on Grounded 2 and the DLC for The Outer Worlds 2 continues.

GAME-scanner analysis

The recent layoffs at Obsidian Entertainment are a direct result of the broader restructuring within Xbox. This has led to a significant reduction in the studio’s workforce, which is known for its innovative RPGs such as Avowed and The Outer Worlds. The layoffs, which mainly took place on 6 July 2026, have not only affected employees, but also the progress of future projects. It is worrying that a studio so dependent on creative talent now has to move forward with a much smaller team. Uncertainty about the impact on the development of new titles is high, especially given the current competition in the gaming industry.

What does this mean for players?

For gamers looking forward to new Obsidian releases, such as Avowed and the DLC for The Outer Worlds 2, there is reason for concern. While the company has confirmed that work on these projects will continue, the reduction in staff could affect the quality and timeline of releases. Players may need to prepare for delays or changes in the development of their favorite titles.