Obsidian Entertainment under Bethesda in Xbox restructuring

Bethesda president Jill Braff reportedly told staff that Obsidian would keep its creative identity and leadership.
Bethesda Game Studios remains in charge of the Fallout franchise, while Obsidian is working on a new Fallout project.

What happened

Microsoft placed Obsidian Entertainment under Bethesda on 22 September 2026, according to multiple reports about Xbox’s internal restructuring. The change is described in that reporting as a new reporting line within Microsoft Gaming, rather than a full creative shift for the studio.

According to a message to staff seen by Aftermath, Bethesda president Jill Braff said Obsidian would retain its creative identity. Feargus Urquhart and the current leadership team are also said to remain in place, with Obsidian now reporting to Braff.

The same reporting says Bethesda Game Studios will continue to oversee the Fallout franchise. At the same time, Obsidian is said to be working with Bethesda Game Studios on a new Fallout project, although it has not been confirmed whether it is a sequel, spin-off, or another type of game.

The reorganization is part of a broader series of changes at Xbox and Microsoft Gaming. Earlier this year, the sources say 1,600 employees were laid off, five first-party developers departed, and a later round reportedly cut another 268 roles.

Timeline

22 September 2026: Reports say Obsidian Entertainment was placed under Bethesda as part of Microsoft’s Xbox restructuring.
22 September 2026: The same reporting says Obsidian is working on a new Fallout project with Bethesda Game Studios.
22 September 2026: Additional reporting says Bethesda president Jill Braff informed staff that Obsidian’s identity and leadership would remain intact.
23 September 2026: Further articles confirm that Obsidian falls under Bethesda and continues Fallout-related work.
Earlier this year: Xbox reportedly laid off 1,600 workers and lost five first-party developers.
Later this year: An additional layoff round reportedly affected another 268 roles across Microsoft’s gaming division.

Background

Obsidian Entertainment is the studio behind Fallout: New Vegas, The Outer Worlds, Avowed, and Grounded. The latest reporting links the studio back to Bethesda during a period of internal restructuring at Microsoft’s game division.

The Fallout franchise remains with Bethesda Game Studios, according to the reports. That matters because Obsidian previously worked with Bethesda on Fallout: New Vegas and is now reportedly involved in a new Fallout project again.

Sources

Eurogamer: https://www.eurogamer.net/obsidian-creative-identity-bethesda-fallout-xbox-restructuring
Aftermath, via reporting cited by Eurogamer
IGN, via reporting on a memo from Jill Braff
Kotaku, via reporting on the Xbox restructuring