The Outer Worlds and Avowed Studio Potentially Also In Trouble At Xbox
· Vice
Rumors about the upcoming massive layoffs at Xbox continue to grow with the latest intel suggesting that Obsidian Entertainment is also at risk of closure.
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Avowed, The Outer Worlds, and Fallout: New Vegas Developer Also In Negotiations to Avoid Closure
Screenshot: Xbox, Obsidian EntertainmentThe impending massive strategy shift at Xbox has been looming over the gaming industry for a few weeks now and it seems like one of the largest rounds of layoffs in gaming history may be about to arrive.
The earliest rumors of the upcoming layoffs and studio closures included mentions of Compulsion Games, Ninja Theory, and Double Fine; but the latest chatter adds Avowed creator Obsidian Entertainment to the mix.
The latest reporting from The Game Business explained that:
“Today, the mood is different. Xbox is looking to reallocate where it spends money. The company wants to invest in its big franchises, and to do that, it needs to cut from elsewhere. Studios such as Compulsion, Ninja Theory, Double Fine, Obsidian, Undead Labs and others are deep in negotiation with Microsoft to avoid closure. The impact of this will likely reverberate across the business.”
Obsidian Entertainment released both The Outer Worlds 2 and Avowed in 2025. Neither games reported massive sales, but both were fairly well reviewed and hold Metacritic scores above 80. Obsidian also released Grounded 2 in 2025, which did seem to be more of a commercial hit than the other two titles.
Rumors suggest that Asha Sharma is trying to refocus Xbox’s investments on core tentpole IPs like Halo, Fallout, and The Elder Scrolls. There seems to be a push to eliminate spending on studios that are not assigned those projects related to those major franchises.
Now that July has officially arrived, the new fiscal quarter is here and it seems likely there will be some more official announcements and changes at Xbox either right before or right after the long holiday weekend. Many insiders are predicting that July 6 is when the hammer will fall and we will find out which studios are officially closing and how widespread the layoffs will be.
Asha Sharma won a lot of goodwill in her first 100 days with plenty of fan-service announcements, but it seems the tide may be turning after a few weeks of constant negative press. Xbox had a very strong showing at its June showcase, but console price increases and the threat of multiple studio closures are now dominating the news cycle.
Be sure to check back soon for more news and updates on the situation at Xbox and Obsidian Entertainment.
Note that this is a developing story and more details may emerge throughout the day…
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