Obsidian's Next Game Is Reportedly a Fallout, and Avowed 2 Is Off the Table

Every so often a rumor lands that makes fans sit up not because it’s surprising, but because it’s the exact thing they’ve wanted for over a decade. That’s the shape of this one. According to a Bloomberg report in July, Xbox is moving its RPG studio Obsidian onto a new Fallout game, reuniting the studio with a franchise it hasn’t touched since 2010’s Fallout: New Vegas.

A few things need saying up front, because the difference between “reported” and “confirmed” matters here.

What’s actually being reported

The core claim, first reported by Bloomberg and echoed by outlets citing their own sources, is that Obsidian will begin work on a new Fallout title. The reporting says the project is being led by Obsidian design director Josh Sawyer, who was the lead designer and director of New Vegas, the game a large chunk of the fanbase still calls the best Fallout ever made.

Bethesda Game Studios, which owns Fallout, is reportedly involved. What’s unclear is the shape of that involvement, whether the two studios genuinely co-develop the game or Bethesda mainly provides support and oversight. That distinction will matter enormously to how the finished game turns out, and it’s exactly the sort of detail that tends to stay murky until an official reveal.

Here’s the crucial caveat: Xbox has declined to comment, and there’s been no official announcement from Xbox, Obsidian, or Bethesda. This is a credible report from a well-sourced outlet, not a confirmed project. Treat it accordingly.

The cost of getting here

The Fallout news doesn’t arrive in isolation, and the surrounding context is bleak. The pivot reportedly comes at the expense of a planned Avowed sequel, which Microsoft is said to have canceled to free up Obsidian for the Fallout project. Avowed launched in early 2025, so a canceled follow-up is a notable reversal.

More sobering, the shift lands in the middle of Microsoft’s sweeping gaming layoffs, and Obsidian itself reportedly cut around a quarter of its workforce. So while “Obsidian makes a new Fallout” is the dream headline, the reporting frames it as part of a painful restructuring rather than a triumphant expansion. That tension is worth holding onto. A studio can be handed an exciting project and be diminished at the same time.

Why New Vegas casts such a long shadow

To understand why this report generated the reaction it did, you have to understand New Vegas. Obsidian built it in about 18 months on an engine and setting Bethesda had established, and it became a cult landmark, celebrated for its writing, its reactive quests, and a world where your choices genuinely rippled outward. For 15 years, “let Obsidian make another Fallout” has been one of the most persistent wishes in the RPG community.

Sawyer’s reported involvement is a big part of why the news carries weight. He’s associated with exactly the design sensibility that made New Vegas endure. His name attached to a new Fallout is shorthand for a specific kind of game, dense, choice-driven, and character-forward, and that’s the version fans are already picturing.

Keep the excitement measured

It’s worth staying grounded on two fronts. First, this is unconfirmed, and reported projects can change scope, change leadership, or quietly disappear, especially inside a company doing this much restructuring. Second, even if it’s real and stays real, a game this early in development is years from release. There’s no trailer, no window, and no guarantee the final product resembles whatever fans are currently imagining.

What we can say is that the report is credible, the pieces fit a plausible picture, and the reunion it describes is one people have wanted for a very long time. If Xbox confirms it, the interesting questions start immediately: how much freedom Obsidian gets, how closely Bethesda steers, and whether a studio recovering from heavy layoffs can deliver the game the pairing promises. For now, it’s a report worth being excited about, with both eyes open.