Obsidian is cancelling the Avowed sequel to make a new Fallout game led by the New Vegas director

[Its_Jackson62]

A pretty dramatic pivot buried inside Xbox's ongoing restructuring

According to Bloomberg's Jason Schreier, Xbox owned developer Obsidian Entertainment has cancelled its planned sequel to 2025's Avowed, along with a separate unannounced RPG, and is instead pivoting the studio onto a brand new game set in the Fallout universe. The new project will reportedly be led by studio design director Josh Sawyer, the same person who directed Fallout: New Vegas, still widely considered the best entry in the franchise and the only mainline Fallout game not made internally by Bethesda Game Studios

The timing lines up with a rough stretch for the studio more broadly, a California WARN Act notice confirmed 52 employees were laid off from Obsidian's Irvine office, roughly a quarter of its total headcount, as part of the wider wave of Xbox job cuts announced recently

Why cancel something that was reportedly going well

What makes this notable rather than just a routine cancellation is that the Avowed sequel was, according to the report, progressing well internally and on track to be publicly revealed sometime in 2027, not a troubled project quietly put out of its misery. It was cut specifically because it did not fit into new Xbox CEO Asha Sharma's strategy of concentrating resources on the company's biggest existing franchises, and Avowed, while reviewed positively, reportedly underperformed commercially enough that a sequel no longer made the cut under that new lens

Josh Sawyer himself had actually been directing a different RPG at Obsidian, one described as structurally and thematically similar to Fallout but not officially part of the franchise, which makes the pivot read less like a cold start and more like redirecting work that was already conceptually adjacent

Why Fallout, and why now

Bethesda Game Studios remains deep in development on The Elder Scrolls VI, meaning there has been no active mainline Fallout project in the pipeline for years, and the franchise has never been more culturally visible thanks to two hit seasons of Amazon's live action Fallout series pulling in audiences well beyond the traditional gaming fanbase. Handing the property to the studio that already delivered the fan favorite New Vegas fills that development gap while keeping Bethesda's own team focused, and Bloomberg's sources indicate Bethesda will still be involved with the new project in some capacity even while its main focus stays on Elder Scrolls

Nothing about this has been officially confirmed by Xbox, Obsidian, or Bethesda, and Bloomberg's own sourcing describes the strategy as still in flux and potentially subject to change, with some staff reportedly still quietly working on the shelved Avowed sequel in case there is ever an opportunity to revive it

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[Gunther29]

Cancelling a sequel that was reportedly going well internally to chase a bigger franchise is such a cold but honestly pretty understandable business decision from Xbox's side given how underwhelming Avowed's sales actually were

[Always_David72]

Josh Sawyer directing New Vegas gives this instant credibility that a random announcement never would, that game's reputation has only grown over the years since it released

[Bob81]

The detail about Sawyer already working on a Fallout adjacent RPG before this pivot makes the whole move feel a lot less abrupt than the headline makes it sound

[Abbie21]

Losing 25 percent of the studio's staff right as they're handed one of gaming's biggest franchises is a rough way to start an exciting new project

[CMPunk88]

Bethesda having zero mainline Fallout game in active development for this long always felt like a strange gap given how huge the TV show has been, glad someone's finally filling it

[QuietObserver13]

Keeping some staff quietly on the shelved Avowed sequel in case it gets revived later is a smart hedge, would hate to see that universe just disappear entirely

[Daemon55]

This is going to be years away realistically, but Sawyer plus New Vegas era Obsidian energy applied to actual Fallout again is exactly the combination longtime fans have wanted for over a decade

[Leo]

That is a wild pivot, but it also kind of makes sense given the timing.

Fallout is having a cultural moment again, so putting a proven team on it is a logical move.

Still rough for anyone who was invested in Avowed continuing.

[Reacher Quarry]

New Vegas director being involved is the part that will get people excited.

That name alone carries a lot of weight.

Expectations are going to be sky high because of that.

[DarkLantern]

Feels like a case of priorities shifting at the publisher level.

Avowed sequel probably seen as lower impact compared to a Fallout title.

Hard to argue with the business logic, even if it stings a bit.

[Gaz90]

Part of me wonders what this means for Avowed itself.

If the sequel is cancelled this early, was the first game not hitting expectations internally?

Or just getting overshadowed by bigger opportunities

[Matt75]

There is something poetic about Obsidian returning to Fallout.

Full circle moment in a way.

Different circumstances now, but still interesting to see.

[Darren92]

Hopefully this does not turn into a rushed project chasing hype.

Fallout works best when it has time to build its world and choices properly.

That is what made New Vegas stand out.

[CarlosBuddle]

Xbox seems to be consolidating around stronger IP plays lately.

Less risk, more recognizable franchises.

Not surprising, but it does change the variety a bit.

[AlphaPhil33]

Avowed always felt like it needed time to grow into its identity.

Cutting off a sequel removes that chance to refine things.

Bit of a shame from a creative standpoint.

[Wizard]

There is also the question of tone.

New Vegas leaned heavily into player choice and consequence.

If they bring that back, it could differentiate from Bethesda's style again

[KDB69]

Feels like Fallout has been in a weird gap for years.

Mainline entries take forever, spin-offs are rare.

So seeing movement at all is a positive sign.

[Rashford49]

Would be interesting if this leans more into classic RPG mechanics again.

Deeper dialogue, more branching outcomes.

That is what a lot of people are hoping for

[Dom9]

There is always a trade-off with these decisions.

One project gains momentum, another disappears.

You just hope the one that survives really delivers.

[NatureBoyDave24]

Not going to lie, a bit concerned about expectations versus reality.

"New Vegas director" attached to anything instantly creates pressure.

Hard to live up to that legacy.

[MachineSaint70]

End of the day, Fallout coming back with a strong creative lead is hard to complain about.

Just hoping it does not come at the cost of variety in the long run

[Craig90]

At least Obsidian has shown they can handle large RPG systems

Even their smaller projects have solid writing and quest design

That foundation is there