Obsidian to make a new Fallout game led by New Vegas director

Q: Will Obsidian’s new Fallout be released day-one on Xbox Game Pass?

The article says Xbox may continue launching new games day one into Game Pass and that this new Fallout project could follow that pattern. It does not definitively confirm that Obsidian’s new Fallout will be released day one on Xbox Game Pass.

Q: How might Obsidian’s reported 25% workforce reduction impact the expected scope or feature set of the new Fallout?

The article says Obsidian cut about 25% of its workforce and cancelled multiple projects to focus on the new Fallout, so the reduction likely narrows the studio's scope by freeing resources for a single, higher-priority Fallout title and reducing parallel projects like an Avowed sequel. That shift suggests the new Fallout may concentrate on core franchise priorities and premium, lower-risk features aligned with Xbox's focus on big franchises and Game Pass launches.

Q: How will this project fit into Xbox’s broader strategy prioritizing Halo, The Elder Scrolls, and Fallout?

The project fits Xbox’s broader strategy by redirecting Obsidian to focus on a major Fallout title, aligning with the company’s decision to double down on core franchises like Halo, The Elder Scrolls, and Fallout. The move tightens Xbox’s content output around its biggest, proven franchises to reduce risk and support premium, potentially day-one Game Pass releases while re-embracing exclusive games.

Obsidian Entertainment and Bethesda will work together on a new Fallout game, and the project will be led by Fallout New Vegas game director Josh Sawyer.

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Derek Strickland

Senior Gaming Editor

Published Jul 8, 2026 3:33 PM CDT

1 minute & 45 seconds read time

TL;DR: Obsidian Entertainment, led by Fallout New Vegas director Josh Sawyer, is focusing on a new Fallout game in collaboration with Bethesda amid Xbox's restructuring. Obsidian canceled other projects and reduced staff by 25% to prioritize this title, reflecting Xbox's renewed emphasis on core franchises and exclusive premium content.

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Obsidian and Bethesda will join forces to make a new Fallout game as Xbox restructures its business, sources tell Bloomberg's Jason Schreier.

Obsidian to make a new Fallout game led by New Vegas director 2

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New updates from the big Xbox reset say that Obsidian has been downsized and is now laser-focused on a new Fallout project. Sources close to the matter tell Bloomberg that Obsidian has cancelled multiple projects to make way for the new Fallout game, including a sequel to Avowed. Josh Sawyer, who served as game director of fan-favorite 2010 RPG hit Fallout New Vegas, is leading the new Fallout project.

It's said that Obsidian has reduced its workforce by about 25% as a result of the reorganization.

Read more: Xbox is 'keeping' Obsidian, has no plans to sell Fallout New Vegas studio
Read more: New Avowed content, expansion, or maybe even sequel teased by Obsidian

The news also comes after reports from last month via The Information that Xbox is now doubling-down on core franchises including Halo, The Elder Scrolls, and Fallout. All of these franchises have multiple entries that have each sold over ten million copies--sometimes tens of millions.

This big reset aims at tightening up Xbox's content output to better match its biggest franchises and reduce risk wherever possible. This is especially important with the Game Pass model in mind, as these new games may continue launching day one into the service. The economics of Game Pass have proven to be a kind of albatross for Microsoft, especially after the group spent so much money investing in releasing titles into a risky flywheel.

The move underscores a new commitment to premium content in a bid to help drive Xbox's growth, and potentially even hardware uptick, as Microsoft is now re-embracing exclusive games.

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Will Obsidian’s new Fallout be released day-one on Xbox Game Pass?

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How might Obsidian’s reported 25% workforce reduction impact the expected scope or feature set of the new Fallout?

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How will this project fit into Xbox’s broader strategy prioritizing Halo, The Elder Scrolls, and Fallout?

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What's also interesting is that Obsidian and Bethesda will be working together on the new Fallout game after nearly two decades of potential friction from a barely-missed bonus payout.