Fallout: New Vegas developer Obsidian is reportedly making a big creative pivot following the latest Xbox layoffs, turning its attention to a new Fallout game and canceling a planned sequel to its 2025 RPG Avowed.

Per Bloomberg's Jason Schreier, Microsoft's Xbox restructuring has resulted in the loss of 25% of Obsidian's overall workforce, a devastating downsizing with equally seismic implications for the studio's slate of new projects. Bloomberg reports that Obsidian had been making good progress on a sequel to Avowed, an underrated RPG overshadowed by generational launches like Kingdom Come: Deliverance 2 and massive blockbusters like Assassin's Creed Shadows. That, alongside other unannounced projects, are reportedly canceled.

Instead, Obsidian is said to be working on a new Fallout game, which lines up with Xbox's updated messaging, not to mention explicit guidance from Bethesda president Jill Braff, that tentpole franchises like Fallout need to be a bigger focus going forward. Details of the new Fallout are unclear - including its relation to the already confirmed Fallout 5 - but New Vegas director and Obsidian design director Josh Sawyer is said to be at the helm.

Bloomberg reports that Sawyer had previously been working on an RPG similar in structure and theme to Fallout, but without the Fallout name, at Obsidian. It's unclear if this new Fallout project is related.

I'm disappointed that we're missing out on a potential Avowed 2 due to even more layoffs at Xbox, but some Obsidian employees are reportedly continuing to work on the project in the hopes that it's one day revived. On the other hand, as much as any new developments that emerge as part of Xbox's reset are somewhat overshadowed by such a massive amount of lost jobs and livelihoods, there's no denying the potential in a new Josh Sawyer-directed Fallout game.

After 37 years at Microsoft, veteran who led Xbox Backward Compatibility program has been laid off: "I look forward to watching how Xbox evolves going forward"