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The Verge

Microsoft’s Xbox reset is pivoting Obsidian to make Fallout instead of Avowed

Wednesday, July 8, 2026


Microsoft announced shifts in its Xbox division involving 3,200 layoffs and studio restructuring. Obsidian Entertainment, a Microsoft-owned studio, is beginning development on a new Fallout title and has canceled multiple projects. Microsoft stated the changes are part of efforts to focus investments on higher priority projects.

Original reporting: https://www.theverge.com/games/963024/microsoft-xbox-reset-obsidian-fallout-layoffs

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