Microsoft's gaming strategy overhaul is redirecting Obsidian Entertainment away from its planned Avowed fantasy RPG toward a new Fallout title instead. The shift comes as part of a broader Xbox "reset" that eliminated 3,200 jobs across Microsoft's gaming division and forced studios to abandon lower-priority projects.
Obsidian, the developer known for The Outer Worlds and Grounded, now shifts focus to the post-apocalyptic Fallout franchise rather than continuing development on Avowed, its original plan. The studio has also scrapped multiple other projects to concentrate resources on what Microsoft deems higher priority work.
This reorganization reflects Microsoft's attempt to streamline its gaming portfolio and focus capital on franchises with proven commercial appeal. Fallout, especially following the success of the recent Fallout TV series, represents a franchise with renewed cultural momentum. Avowed, while anticipated by RPG fans, apparently didn't make the cut in Microsoft's recalibrated priorities.
The layoffs and studio shuffles highlight the pressure facing major publishers to consolidate around blockbuster franchises. Microsoft now owns Fallout through its Bethesda acquisition, giving it direct control over the intellectual property and the ability to assign it to trusted developers like Obsidian.
For players, this means a new Fallout game is coming from a studio with strong RPG credentials, though it remains unclear what happened to Avowed's development timeline or whether the project will eventually resume. The canceled projects suggest Microsoft is willing to scrap work in progress if it conflicts with strategic priorities.
The move underscores how dramatically Xbox's leadership, under Phil Spencer, has repositioned the division since taking over. Rather than chasing quantity, Microsoft appears committed to backing fewer projects with greater commercial potential and established fanbases.