Microsoft’s ongoing restructuring has hit Obsidian Entertainment hard, with reports indicating the studio has lost approximately 25% of its workforce. This significant reduction in headcount raises serious questions about how the developer will manage its current pipeline of major titles.
The scope of the cuts at Obsidian
According to sources cited by Kotaku, roughly 60 to 70 employees were let go from Obsidian. This number represents a quarter of the studio’s total staff. The layoffs affected a wide range of roles, including producers, artists, designers, programmers, QA testers, and writers.
Crucially, many senior staff members were among those laid off. The studio also lost its only recruiter during this round of cuts. Most of these departures occurred as part of the immediate 1,600 job reductions Microsoft announced on Monday, with a smaller number expected to occur later in the year as part of the broader Xbox restructuring plan.
Uncertainty over current projects
Despite the rumors that Obsidian might be shutting down entirely, the studio remains operational. However, internal morale and strategic direction are reportedly in flux. Sources indicate that remaining employees have expressed concern about how the team will proceed with its “huge list of projects” given the steep loss of personnel.
As of now, there has been no clear guidance from Microsoft leadership on how these priorities should be adjusted. The studio is currently focused on continuing development for Grounded 2, which is in Early Access, as well as two announced DLC story expansions for the open-world sci-fi RPG The Outer Worlds 2. Beyond these specific commitments, it remains unclear what other projects Obsidian will prioritize or if any will be delayed or canceled.
Context of broader Xbox restructuring
These layoffs are part of a larger wave affecting Microsoft’s gaming division. In total, 3,200 roles have been cut across Xbox, with four studios splitting away from the company entirely. Other major developers like id Software and Bethesda Game Studios have also faced significant reductions.
Xbox CEO Asha Sharma has previously stated a desire for the brand to “move faster” with its core intellectual properties, specifically naming Fallout, The Elder Scrolls, and Halo. While Obsidian is best known for creating Fallout: New Vegas, the loss of senior developers who worked on that title may impact any potential future involvement with the Fallout franchise.
This restructuring follows an internal reorganization at Obsidian earlier this year, which was prompted by recent titles like Avowed and The Outer Worlds 2 failing to meet performance expectations. The combination of these previous adjustments and the current layoffs presents a significant challenge for the studio’s ability to deliver on its upcoming roadmap.
What this means for you: If you are anticipating updates or releases from Obsidian, particularly regarding The Outer Worlds 2 DLCs or Grounded 2, expect potential delays. The loss of senior talent often leads to slower development cycles as remaining teams adjust to new responsibilities.
Source: Windows Central
Over to you: Do you think Microsoft should pause development on new IP to focus resources on existing franchises, or is cutting costs necessary for long-term stability?
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