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Obsidian Scraps Avowed 2 To Focus On New Fallout Game

Obsidian Scraps Avowed 2 to Focus on New Fallout Game

Obsidian Scraps Avowed 2 to Focus on New Fallout GameObsidian Scraps Avowed 2 to Focus on New Fallout Game
Updated On: July 21, 2026

Obsidian Entertainment is officially returning to the Fallout universe, ending years of speculation and giving fans of Fallout: New Vegas something they have wanted for more than a decade. The announcement comes during a turbulent period for Xbox, with Microsoft's recent restructuring, which led to major layoffs in its gaming division.

As a result, Obsidian has canceled its planned sequel to last year's Avowed, along with several other unannounced projects, and will instead direct its focus toward a new Fallout title. The project will reportedly be led by Josh Sawyer, the director behind Fallout: New Vegas, working alongside Bethesda Softworks.

Reports indicate Obsidian lost roughly 52 employees during Microsoft's latest round of layoffs, with several projects either canceled or scaled back as Xbox changes priorities in favor of more popular games like Fallout, The Elder Scrolls, Doom, Quake, and Wolfenstein. Avowed 2 itself reportedly hasn't been killed off entirely, with a skeleton crew said to be keeping it alive in case Obsidian circles back to it someday.

Obsidian developed Fallout: New Vegas in 2010, a game that has been one of the highest-rated and most beloved entries in the franchise. Ironically enough, such a well-beloved game was cooked up in about 18 months, which left it with many technical issues. But its long quests, unique factions, and meaningful player choices helped it build a loyal fanbase that has only grown with time.

There's a running theory in the fanbase that Bethesda has never quite forgiven Obsidian for turning an 18-month "rush job" into the most beloved game in the franchise, but it looks like whatever tension existed has settled enough for Obsidian to be back at work on something new. Bethesda hasn't revealed whether Obsidian's project is a direct sequel to New Vegas, a completely new story, or something else entirely. For now, the studio has simply confirmed that work is underway and promised more details down the line.

Storytelling and character writing have always been among Obsidian's strongest suits, but their last game, Avowed, felt a little weaker on that front. That raises the question: Does Obsidian still have it? If the studio can recapture the freedom and sharp writing that made New Vegas a lasting favorite, while bringing fresh ideas to the franchise, this could be the next big game that shakes up the industry.

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