Obsidian Entertainment struggles after massive layoffs at Xbox
Intelligence Summary
- Obsidian Entertainment, known for Fallout: New Vegas and The Outer Worlds, faces challenges after recent Xbox layoffs.
In short
- Obsidian Entertainment has lost 60-70 employees due to recent layoffs at Xbox.
- The studio is uncertain about the progress of its projects, including Grounded 2 and DLC for The Outer Worlds 2.
- Microsoft has announced it will cut a total of 3,200 jobs in the biggest restructuring in Xbox history.
GAME-scanner analysis
The recent layoffs at Obsidian Entertainment are the result of a broader restructuring within Microsoft, with 1,600 employees laid off immediately and another 1,600 to follow over the course of the fiscal year. This has led to a significant reduction in staff at Obsidian, which was already struggling with the commercial performance of recent titles such as Avowed and The Outer Worlds 2. The studio, known for its strong narrative games, must now assess the impact of these layoffs on its future projects. The uncertainty among staff is understandable, especially given the large number of projects currently in development.
What does this mean for players?
For gamers looking forward to new Obsidian releases, this is a worrying time. The studio has not announced any new titles after the recent commercial setbacks, and the progress of existing projects is now at risk. Players are wondering whether the quality and creativity of future games will suffer as a result of these changes. Xbox's focus on its biggest franchises could also mean that Obsidian's unique voice in the gaming world comes under pressure.
Timeline
2026-07-06: Obsidian Entertainment loses 60-70 employees due to layoffs at Xbox.
2026-07-07: Microsoft announces it will cut 3,200 jobs in the biggest restructuring in Xbox history.