# Microsoft’s Xbox to Shift Obsidian Studio to New ‘Fallout’ Video Game

> **Newsylist Open Intelligence Dossier** · First detected: 2026-07-08 18:29 UTC · Category: Technology · Sources: 12 · Current Velocity: 12.12

## Executive Summary
Microsoft is pivoting Obsidian Entertainment to develop a new Fallout game following the cancellation of Avowed 2.

## Intelligence Brief
Microsoft's Xbox division is shifting Obsidian Studio's focus toward a new Fallout title. This pivot comes alongside the cancellation of the Avowed sequel.


Coverage from Bloomberg, The Verge, Forbes, and Kotaku emphasizes this strategic reset. Reports from Windows Central further indicate that Obsidian has lost 25% of its developers due to Microsoft layoffs, while MMORPG.com notes that Id Software has also been affected.


Future developments center on the production of the new Fallout game following the reported cuts and the termination of Avowed 2.

## Verified Facts & Key Claims
### What project was cancelled at Obsidian?
According to coverage from IGN, Forbes, and Kotaku, Avowed 2 has been cancelled.

### How many developers did Obsidian lose?
Windows Central reports that Obsidian lost 25% of its developers to Microsoft's layoffs.

### What other studios were mentioned in the context of Xbox cuts?
MMORPG.com mentions that Id Software was gutted and that Blizzard employees are awaiting further information.

## Key People, Organizations & Locations
Focus, Fallout, Obsidian, Video Game, Shift Obsidian Studio, Avowed, Obsidian Reportedly Cancels Avowed, New Fallout Game

## Multi-Source Evidence Table
| Source Outlet | Headline | Published (UTC) | Verification URL |
|---|---|---|---|
| Game Developer | Report: Obsidian losing around 1/4 of its staff in 'Xbox reset' | 2026-07-08 18:50 | [Source Link](https://news.google.com/rss/articles/CBMirAFBVV95cUxNTldmV1czcW4zc1VuU2ltRlZJZVBqdVFNU2syWEw0ekh6MUV6YjEzdExHS0FlcEZaYUhCY25iN3NfWG1VV0lxVWoyZU5lUE9YMGx2RVJ0UG9TNUM2ek0wNE1kd0JvQzh0TkJucEJIbkx5d04zMW5CQ0I2VTN6dFFGZzNDUWk0czVDdWdCeFNjUURXcFJ6bXB5S1dSYkdHYzVUYThMS0VwVk9zVmdm?oc=5) |
| The Verge | Microsoft’s Xbox reset is pivoting Obsidian to make Fallout instead of Avowed | 2026-07-08 18:50 | [Source Link](https://www.theverge.com/games/963024/microsoft-xbox-reset-obsidian-fallout-layoffs) |
| nerdist.com | FALLOUT: NEW VEGAS Studio Will Tackle Next FALLOUT Game | 2026-07-08 17:52 | [Source Link](https://news.google.com/rss/articles/CBMipwFBVV95cUxOdGJxaVhoOXZlUjNFZkM3QTdBczRVeXNXYWVwVHFBdTRFODg1TldjOVRGSklvVUd2RUtaNEUwYXF1WDZFVDVOUl9DV0JvZ1NOU3RLZDF5UGFTc0xyaENodGVLLWJGMnpVbFpSNWNxMF8xTkRZWGd2bnYwdXdvVTQ3MTZiWnlaSkpEM1N1dHpSekVKRkk2X21JY1V5WUFfUllJS05YNTgzUQ?oc=5) |
| Pure Xbox | Report: Xbox Cancels Avowed 2 And Puts Obsidian To Work On New Fallout Game | 2026-07-08 17:52 | [Source Link](https://news.google.com/rss/articles/CBMisgFBVV95cUxPZTkyS3RnX3pfSGw4RVVweEoyU05MZ1FVOVh1eHNvd3hBUVpFVlpxTEs1ODRNTEdQVmhELXlHZnkyQTl1LWx6NFVDeXdCLTh0NWI0MzlhSEdmQnZVQ1A2UTBTR0NVaUFMT1BGenZqY2pIODg4eE14bUJYS2RocEN5WjJzTnBwb3prcE11dHVJNWlpNm16N2ZoOTlaWUZNMENYUDRJSnJsOFFkd3Azb1NUWFRB?oc=5) |
| Engadget | Microsoft Reportedly Cancels Avowed Sequel As Obsidian Focuses On A Fallout Game | 2026-07-08 17:52 | [Source Link](https://news.google.com/rss/articles/CBMitAFBVV95cUxNX3pLTXBTR0stek5XY1F2SllPU3pRd1k4LVEwOVJJTTJ3UlBnX3BKaVJ2YVpobjNLQlY2dTFRVGlZLXpxX18xQ2JEd3dzOTZJNXoyNlFWSFg4QzNZeTRNVGhaX2tUcjN4OFZtTDBqZWp1MUpINEhZYjR4NWhIMGJ6NTFKSzhJdThyNW1IU2o5SmdNVzV2TGUycGQzMWh4UVN5UWlrcXFmMFRkai1RLUVIMHJyX0Y?oc=5) |
| 80 Level | Obsidian Is Reportedly Making a New Fallout Game, Avowed 2 Cancelled | 2026-07-08 17:52 | [Source Link](https://news.google.com/rss/articles/CBMinAFBVV95cUxOWTdETjYzODRfUHNwZkNFY0RIMWpvTnBBZGJ6ZERJY00zeXowVzBKak5qYUIyNXVtQzBfRExBdkVJcHM4OEdDMkNFQ0R6SjVfT3RmLTBXcUFyWWdQU09zQ0s2LThvYlV3VUV2TnZkcHF2LURPdUNpZ3FuRkQ1azVpY0pYT0xmVzhqWGZFZXE2Y1I0cEZnZTduVTJPS20?oc=5) |
| Windows Central | Xbox's Obsidian and Bethesda are making a new Fallout game together, here's what we know | 2026-07-08 17:52 | [Source Link](https://news.google.com/rss/articles/CBMi4AFBVV95cUxOS241VTBrZXZOdm1JNTlqaERnVGFlbFA2RnN6ZVVGTW1WVV9qVnRsNHdKT1lremQ3eW9EYVA1UXM1bXBQRWZJSlMzQWhvaFBzdTI0Q1lDRnoyMnVoTGZ0bDlkWFc0Zk9zNHp4eGhWRUpBYVlMemx2ZUtCOXRMbTVmWVNWRFRQQlFPVEVjN3JNVmtqV0RUcXE3ODFzbFB1YVRza3ptaTBLTl9jU2ZKRmE2QWVrMUQwUlQ1amxoOEN4QzlsdExHa3NqajJvdWxSZXk1YjhoZVF1ZkY1UVBEMk5ETQ?oc=5) |
| The Verge | Microsoft’s Xbox reset is pivoting Obsidian to make Fallout instead of Avowed | 2026-07-08 17:52 | [Source Link](https://news.google.com/rss/articles/CBMiiwFBVV95cUxPdkxHX0ZFdGF5LXF3ZUdoLUJFSENQOXNfa3g5ZUVGTW10VEVwYXQ2amMzUVpxRGhpbEE1eG00QzJIUXFjVVo1ZUowSFduWFRxSzJsa0o3cThhTVNBRDRIZ1Y3aXQ2QTAtcGVhR0xCS1FLRnBlclFmWGxyVG84TlpQMC1kamFsa0hQRzhN?oc=5) |
| IGN | Obsidian Reportedly Cancels Avowed 2 to Focus on a New Fallout Game | 2026-07-08 17:52 | [Source Link](https://news.google.com/rss/articles/CBMiiwFBVV95cUxNOGlOUUhfN0F5X19yam40cWFXNEctVENuV0dlYUlzMlZaRGdOMmRZWGtES0h6Z1ZDT2x4MUFfVVVoUmpBYVlKVThKcU9LT2lWOW1XenZrSU5SWDUwWmJMLXNYSFJSVEZLLXZZMXlGZ3NLeGVaN1UzQnBQWVFyVVhxclgwNVQ4Y3RCOVNR?oc=5) |
| MMORPG.com | Xbox Cuts Mean Id Software Gutted, Major Obsidian Layoffs, But Blizzard Employees Will Find Out Later | 2026-07-08 17:52 | [Source Link](https://news.google.com/rss/articles/CBMi1AFBVV95cUxONjhhczBxZmNBTUtQTmFPOEhpTVVBU2gzTGEyM3h2YzJnazJXRnhwV1RDejJPYVJrcWc0eENHQXdsVEYwNDAtcVdwYU5kc2NibmhzWGZ0TThmY2lGbTI1M2xjQUFiLU9NUlcxaUQ4TE1JWGVSZmNwLWJrejJwT3BJMEkzeWhTUG83OFowdnJQUjVyOU55R1JuS3BmTkg3SmVoYzc5QkJybU0xdnhxLVc1UTNtUkhmQWt6NzFSY3JkekxIU0lZS0ZDbVpaZkd4ZjNrdEFpag?oc=5) |
| Forbes | New ‘Fallout’ Game Reportedly Coming From Obsidian, ‘Avowed 2’ Cancelled | 2026-07-08 17:52 | [Source Link](https://news.google.com/rss/articles/CBMiugFBVV95cUxPY1FKdmx5bWNHSm9zdEE3NlAzNmI5STUtVFVpUDkwSGFHRldhN3AzLWxQUFFDTmZfY0g0Y0FHMU9MSFRycWlCbXJjNl9pMjE3Umc1aU84Q3FaQXUzbEtpN041V0c5dGpMdFRaRm16ampHWjB3eE9xRHV2emdzRDFTSTlCQ1J4a2RBZE9FR1p0VDVZQWZtUTdBQ3FwOUpxcW93V2h2WHc0Wjh1RWVBMjZ5MmQ4VGt3WlhrMEE?oc=5) |
| Windows Central | Report: Xbox's RPG studio Obsidian has lost 25% of its devs to Microsoft's layoffs | 2026-07-08 17:52 | [Source Link](https://news.google.com/rss/articles/CBMiwgFBVV95cUxPanR3V1FvT0tLdzBIUWppXzd4MVE5NlNSM3Q0c2IyczFUMVdwZUJTSW9oT1c2WUhTU1gyd0lvNWt5SGZlRlZQUlJTNHhpVWJQeDVTeG4weklsZ1RCY204MHA4a1RIazAtaHBrNjcxSExHal9jSFkwdWtpQV9vekVLdF9rM19BWl85MmlqakxpX0x0RUNFcmhyaC1oak81dHJwX2szU3VGVVliVFhLdWJNUzJuWWhLemFoTlBYMDBuRnVSQQ?oc=5) |
| Kotaku | Obsidian Reportedly Working On New Fallout Game After Xbox Cancels Avowed Sequel | 2026-07-08 17:52 | [Source Link](https://news.google.com/rss/articles/CBMirwFBVV95cUxQWjR1bWwtMEs0MW9maFdhX3BCNUxMZElDYTYtUGxKLWU5bEN2aDd4LUdyVWZJdVJva2h2T2wxRnRkWHUyWkEzbDZxOVo1QW9BcnIzWXctZHUzZnRTSFFqZUFwXzdmYkNOMW52dUVoMUdFN2NhZFl0RF91S2F6bmdPb2gxQWFpZHJCaTczUHJ6X3QtTGR0c0NjQ2tsLURSbGlWNzVTUko3Mjh5TmhBU2Jr?oc=5) |
| Bloomberg.com | Microsoft’s Xbox to Shift Obsidian Studio to New ‘Fallout’ Video Game | 2026-07-08 17:52 | [Source Link](https://news.google.com/rss/articles/CBMiugFBVV95cUxPMmM3STZ1WHo0bkdiYVRsbTlzdkRiX2JhelFjVmZScEpFRFZpSWV2YWhBT0kzaGljU1dVblozRnoyOUR5RXo4dzNYNWdPQkVFWncwajBfc25JNHptd1IteG1GLXZnQXl1UFlJb3Fiazl3Q1h3R3FNRDNUaW04d0NiM096aEZodGM5YzRhUG83QXNucUgzcmh4bDZMOS1hWm16OWp3TEh5aGoxMHE2ZDl0QmpPRjA2UmY3dkE?oc=5) |

---
*Canonical Source: https://www.newsylist.com/trend/2026-07-08/microsoft-s-xbox-to-shift-obsidian-studio-to-new-fallout-video-game*
*Synthesized by Newsylist Open Intelligence Engine under E-E-A-T journalistic standards.*