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Gaming/Platforms/Xbox

Xbox Layoffs Hit Obsidian Hard — What It Means for Fallout's Future

Bethesda confirms new Fallout game from Obsidian, Fallout 3 and New Vegas remasters, and Fallout 5 in pre-production amidst Xbox layoffs

By Cameron Reed · Updated August 16, 2026 at 3:07 PM

Xbox Layoffs Hit Obsidian Hard — What It Means for Fallout's Future
Xbox Layoffs Hit Obsidian Hard — What It Means for Fallout's Future

The recent Xbox layoffs have sent shockwaves throughout the gaming industry, with multiple studios affected, including Obsidian Entertainment. Despite the significant impact, Bethesda has confirmed that Obsidian is working on a new Fallout game, in addition to remasters of Fallout 3 and Fallout: New Vegas. Furthermore, Fallout 5 is now in pre-production, according to Bethesda Chief Todd Howard.

The layoffs, which will put 3,200 people out of work, have been described as a 'reset' of Microsoft's gaming business. Xbox CEO Asha Sharma and chief content officer Matt Booty outlined the brand's dire financial situation in a June public memo, highlighting broad internal issues with Xbox games, consoles, infrastructure, and marketing.

Obsidian Entertainment, the developer behind Fallout: New Vegas, has been hit hard by the layoffs, with reports suggesting that the studio lost 60 to 70 employees, or roughly one quarter of its staff. Multiple in-development projects were canceled at Obsidian, including a sequel to Avowed.

Despite these changes, Bethesda has assured fans that the decision to collaborate with Obsidian was not forced and emphasized their commitment to the Fallout franchise. The company has also confirmed that the layoffs did not affect the development of The Elder Scrolls 6, Fallout 76, or The Elder Scrolls Online.

In a rare Reddit post, Todd Howard addressed fans, stating that Bethesda is 'constantly listening' to feedback and ideas from the community. He encouraged fans to continue providing feedback, which may or may not be used as inspiration for future games.

The confirmation of a new Fallout game from Obsidian has generated significant excitement among fans, with many taking to social media to express their enthusiasm. However, some have raised concerns about the potential impact of the Xbox layoffs on the game's development.

As the gaming industry continues to evolve, the future of the Fallout franchise remains uncertain. With the recent layoffs and the shift in Microsoft's gaming business, it is unclear how these changes will affect the development of upcoming games.

The layoffs are a devastating blow to the gaming industry, and it's unclear how they will impact the development of upcoming games.

The Elder Scrolls 6, Fallout 76, and The Elder Scrolls Online are reportedly unaffected by the layoffs, with Bethesda confirming that these games will continue to receive support and updates. However, the future of other projects, including the new Fallout game from Obsidian, remains uncertain.

As the gaming community waits with bated breath for more information about the future of the Fallout franchise, one thing is clear: the recent Xbox layoffs have significant implications for the industry as a whole. With the rise of new technologies and the increasing demand for high-quality gaming experiences, the future of gaming is more uncertain than ever.

In the wake of the Xbox layoffs, Bethesda has pushed back against claims that Xbox is exerting control over the Fallout franchise. A studio representative stated that Bethesda Game Studios manages the entire franchise, from games to movies and everything in between. However, given the current situation, it is likely that Xbox played a significant role in the decision to have Obsidian work on a new Fallout game.

The recent confirmation of Fallout 3 and New Vegas remasters has also generated significant excitement among fans. These remasters are expected to bring the classic games up to modern standards, with improved graphics and gameplay.

As the gaming industry continues to evolve, the future of the Fallout franchise remains uncertain. With the recent layoffs and the shift in Microsoft's gaming business, it is unclear how these changes will affect the development of upcoming games. One thing is clear, however: the Fallout franchise remains one of the most beloved and enduring franchises in gaming, with a dedicated community of fans eagerly awaiting the next installment.