According to a report, Obsidian is set to develop a Fallout title as other unidentified projects have been canceled

A lone figure in a long coat stands before a neon-lit city skyline under a dramatic, fiery sky. In the foreground, desolate wasteland stretches towards a tall, illuminated tower that dominates the cityscape. A classic "New Vegas" sign and a "Route 38" sign are visible amidst the buildings, illuminated by spotlights. — Image credit: Obsidian/Bethesda

Following the cancellation of several undisclosed initiatives, Obsidian is reportedly embarking on the development of a new game in the Fallout series.

This initiative aligns with a major restructuring at Xbox, which has allegedly affected 60 to 70 employees at Obsidian, as detailed in this report and another related article.

According to Bloomberg, a select group within the company will continue to work on a sequel for Avowed, hoping to rejuvenate the project, while others will be tasked with producing additional content for The Outer Worlds 2 and Grounded 2.

The primary direction for Obsidian is to lead the design of a new Fallout title, with guidance from Josh Sawyer, the studio design director.

Collaboration between Bethesda and Obsidian is anticipated for this project, though an Xbox representative offered no remarks on the plan.

Previously, Obsidian created Fallout: New Vegas under Sawyer's direction. The game inspired the second season of the Fallout TV series on Prime Video.

This series swiftly rose to become Prime Video's sixth-most viewed series ever, with a marked boost in the sales of Fallout games following its release last December.

Obsidian is among several studios experiencing the effects of the recent Xbox restructuring announcement made earlier this week.

The changes have been widespread, with Id Software confirming 136 layoffs and 22 job cuts occurring at Bethesda Game Studios in Austin.

ZeniMax Online Studios might see up to 50% of its development team impacted. Staff reductions have also taken place within Activision, Blizzard, King, Mojang, and Xbox Game Studios.

Further adjustments saw five internal studios divested; Compulsion Games and Double Fine are set to become independent. Meanwhile, Ninja Theory and Undead Labs will renegotiate their ownership arrangements, and Arkane began consultation proceedings.

Xbox CEO Asha Sharma commented, "Since 2018, we have aggressively expanded our studio portfolio, with the volume of games produced each month in the industry now surpassing the last decade combined."

"We now compete not just with major publishers, but also with independent developers. It is neither feasible nor desirable to own every successful independent studio. We've also realized that we're not the ideal home for every studio type."

"During Xbox's transition, we will aid independent creators by offering open development resources and allowing them to reach their audiences."