Full Breakdown
Microsoft Reshuffles Xbox Studios, Folding Obsidian into Bethesda
By Drooid · · How we work
Core Reorganization
Microsoft announced a further round of its Xbox “reset,” moving Obsidian Entertainment under Bethesda Game Studios. The change is presented as a shift in reporting structure: Obsidian will now report to Bethesda president Jill Braff, while Bethesda Game Studios retains leadership of the Fallout franchise. The move follows a broader restructuring that also placed Halo, Rare, and World’s Edge under Activision and eliminated additional positions across Microsoft’s gaming division.
Background and Recent Layoffs
The reorganization comes after a July round of cuts that removed roughly 25 % of Obsidian’s workforce. This week’s announcement added 268 more layoffs and signaled that nearly 2,000 Xbox studio staff are slated to be reduced over the current financial year. The “reset” is framed by Microsoft as a strategy to improve financial performance and sharpen its franchise-focused model.
Official Statements & Responses
She confirmed that Feargus Urquhart and the Obsidian leadership team will continue to lead the studio, with the studio reporting to her. Braff also noted that Bethesda Game Studios will keep overseeing the Fallout franchise and that the two teams will collaborate on an early-stage Fallout project, promising further updates in the coming months. The memo reassured staff that existing roadmaps would not be reset and that the partnership aims to benefit players and fans.
Employee Concerns and Industry Skepticism
Despite the assurances, employees have voiced skepticism, questioning whether Obsidian will retain any autonomy beyond its name. Observers note that Microsoft’s growing emphasis on treating franchises as tradable assets may clash with the creative independence historically associated with studios like Obsidian. The sentiment reflects broader unease about the impact of repeated layoffs and studio shuffles on morale and trust within the development community.
Data and Project Impact
- 268 workers laid off in the latest round.
- Approximately 25 % of Obsidian’s staff were cut in July.
- Overall Xbox studio reductions approach 2,000 positions for the fiscal year.
- Bloomberg reported that the restructuring forced Obsidian to cancel several projects, including a sequel to the first-person fantasy RPG *Avowed*, redirecting resources to a new Fallout title.
- Bethesda confirmed that *Fallout 5* is in pre-production, while remasters of *Fallout 3* and *Fallout: New Vegas* are also planned; no release windows have been disclosed for any of these projects.
