Obsidian’s New Fallout Game Is A Dream Come True, But There’s a Massive Catch

According to recent reporting from Jason Schreier at Bloomberg, Xbox has reportedly handed Obsidian Entertainment the keys to a new Fallout game. To a massive portion of this franchise’s fanbase—a portion I consider myself a part of—this might seem like a pipe dream come true. And at face value, it’s easily the best news Fallout diehards have had in well over a decade.

But things are never so simple amid the muddied and bloodied landscape of the 2026 gaming industry. The same restructuring that conjured this new Fallout game also snatched jobs away from over 3,000 people, including developers from Obsidian itself. So, as that studio alone sheds roughly a quarter of its staff, watches a promising sequel get the axe, and pivots to a franchise the studio’s own leadership implied it wasn’t especially itching to revisit just last year, it’s important to keep in mind what you’d really do, or want, or give up, for a successor to New Vegas—because it really might feel hollow given its surroundings, and it has already come at a terrible cost.

Xbox’s Restructuring, Schreier’s Reporting, and Obsidian’s Losses

For context, Schreier’s July 8 report is as dense as it is brief, stating that, according to people familiar with the matter, Obsidian has canceled multiple projects to begin work on a new Fallout title. Studio design director Josh Sawyer—the same man who directed New Vegas—will reportedly lead it, with Bethesda Game Studios attached to the project in some capacity. This news has not yet been confirmed by any official source or studio, but it’s incredibly believable given Schreier’s reliability and the fact that it fits perfectly with new Xbox CEO Asha Sharma’s plan to funnel resources toward the company’s biggest franchises.

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By Bloomberg’s account, this upcoming Fallout title comes at the cost of several projects, most specifically an Avowed sequel, which was reportedly progressing well and on track to be revealed within a year. Some staff members are reportedly still keeping it on life support in hopes of an eventual revival, whilst others are continuing work on DLC for The Outer Worlds 2 and on Grounded 2 updates. The assumption seems to be that the rest will work on the new Fallout, but that remains unclear right now, and Schreier stresses the new strategy is “in flux” and could still change.

What is clear despite how fresh this news is: this possible plan already has a body count. Again, Sharma’s broader “reset” of Xbox involved cutting around 3,200 jobs across Microsoft’s gaming division and divesting several studios entirely, but at Obsidian specifically, a California WARN notice confirms 52 layoffs. That’s a top-to-bottom sweep affecting every layer of the studio, and it’s a figure most analysts peg at roughly a quarter of the studio’s headcount.

Image via Modiphius Entertainment

With all of that out of the way, the average New Vegas fan is still left with a number of questions and worries, and in terms of the larger picture, a game born directly out of mass layoffs begins life saddled with a morale problem that no amount of studio pedigree fully cancels out. The developers left to actually build this future for Fallout just watched 52 colleagues get shown the door, and that’s without mention of the similar number of losses across Bethesda’s various studios. There’s a lot of emotional baggage on the playing field here, and one must assume that runs the risk of seeping into the work.

Countless Other Questions Remain Ahead of Obsidian’s New Fallout

More specifically, beyond Josh Sawyer, the surviving New Vegas pedigree is likely thinner than fans might like, though it isn’t totally barren. Lead creative designer John Gonzalez—the writer behind Mr. House, Benny, and Yes Man—rejoined Obsidian in early 2025 with a pointed “No, it’s not FNV2” stapled to the announcement. But that disclaimer predates this entire Fallout pivot and may now be worth nothing.

The same goes for Tim Cain, the co-creator of the original Fallout, who also rejoined Obsidian full-time back in December 2025. According to his announcement video about returning to work, he was adamant at the time that his mystery project was something nobody would guess—but again, that was said well before this new studio path was carved. As such, his place in all this is totally up in the air, though he hasn’t mentioned anything via YouTube about the situation, and his most recent video is from July 8 as well.

Obsidian’s Voice Will Matter Either Way

The last truly worrisome detail skewing this news has to do with Obsidian’s internal drive to make another Fallout game, as several comments from people over the course of the last few years paint the picture a little less brilliantly. Josh Sawyer previously said he would take on a Fallout game if Microsoft asked and if he could do it on his own terms—but it’s hard to picture those terms ever including a hollowed-out team. More recently, he’s downplayed his agency in the matter entirely, noting there are “titans above” him who decide what happens with the IP.

And last year, Obsidian’s leadership signaled to several outlets that the studio was interested in its own IP rather than chasing sequels to other people’s greatest hits. Of course, that could just as easily be read as PR gloss, but even taken with the requisite grain of salt, a forceful redirect from on high to a Bethesda-owned franchise right on the heels of that messaging still isn’t the triumphant homecoming fans may have wanted from all of this. And should it be a truly worst-case scenario, Obsidian might not even have the agency to make something great, given the layoffs and Xbox’s new, much more “hands-on” strategy.

There is one lone sliver of confounding kismet emerging from this situation, and it concerns several mixed messages that predate the Xbox restructure. According to several sources, Sawyer was reportedly already directing a cancelled RPG that was either structurally and thematically close to Fallout, or totally tied into the franchise. If that was true, this pivot may be less of a cold start than it first appears.

An Extremely Tense Excitement About Fallout

Despite all of these worries, and very real anger and regret on behalf of developers who—without any doubt—work hard to make great games, it’s worth reconciling internally that the pitch for a new Obsidian Fallout remains intoxicating almost because of how impossible it seemed. For a huge portion of the fanbase, New Vegas remains the high-water mark of the Fallout franchise (at least beyond the isometric perspective)—the spin-off that out-wrote the very game it was built on top of. Handing the wasteland back to Sawyer is a full-circle move fans have been literally begging for over several years.

And I’ll admit that consumer spite has something to do with it, at least from my end; The Elder Scrolls 6 is still years away, and a mainline Fallout 5 wasn’t realistically landing until well into the 2030s. This turn might rectify that, but even still, none of this dissolves the central tension here, regardless: this is the game a huge number of us have wanted for over a decade, showing up wrapped in precisely the conditions most likely to sink it. So for now, despite any valid reason to be excited, it seems the only sane move from the fan side is to hope hard and expect absolutely nothing.