Obsidian's new Fallout game is a dream come true, but there's a huge catch

According to the latest reporting from Jason Schreier at Bloomberg, Xbox has reportedly handed Obsidian Entertainment the keys to a new Fall-out game. For a large portion of this franchise's fan base—a portion of which I consider myself a part—this may seem like a dream come true. And at face value, that's easily the best news Fall-out diehards have had for over a decade.

But things are never that simple amid the muddy and bloody landscape of the 2026 gaming industry. The same restructuring that produced this new one Fall-out the game also took the jobs of over 3,000 people, including developers from Obsidian itself. So as that studio alone sheds about a quarter of its staff, sees a promising sequel get the ax, and pivots to a franchise that the studio's own leadership indicated it wasn't particularly keen on revisiting last year, it's important to think about what you'd really do, or want, or give up, for a successor to New Vegas— because it can really feel hollow given its surroundings, and it's 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 concise, stating that, according to people familiar with the matter, Obsidian has canceled several projects to begin work on a new Fall-out title. Studio designer 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 yet to be confirmed by any official source or studio, but it's incredibly believable given Schreier's trustworthiness and the fact that it fits perfectly with new Xbox CEO Asha Sharma's plan to channel resources into the company's biggest franchise.

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By Bloomberg's account, this upcoming Fall-out title comes at the expense of several projects, specifically one Avowed the sequel, which was reportedly progressing well and on track to be revealed within a year. Some employees are said to still have it on life support in hopes of a possible revival, while others continue work on the DLC for The Outer Worlds 2 and further Grounded 2 updates. The assumption seems to be that the rest will work on the new one Fall-outbut that remains unclear at this point, and Schreier stresses that the new strategy is “in flux” and could still change.

What's clear despite how fresh this news is: this possible plan already has a body count. Again, Sharma's broader “reset” of Xbox meant about 3,200 jobs were cut in Microsoft's gaming division and several studios were completely divested, but specifically at Obsidian, a WARN notice from California confirms 52 layoffs. It's a top-to-bottom sweep affecting every layer of the studio, and it's a figure most analysts peg at about a quarter of the studio's staff.

Image via Modiphius Entertainment

With all that out of the way, the average New Vegas fans still have a number of questions and concerns, and in terms of the bigger picture, a game that was born directly after mass layoffs begins life with a moral dilemma that no studio pedigree can fully remove. The developers left to actually build this future for Fall-out just saw 52 colleagues get shown the door, and that's without mentioning the similar number of losses at Bethesda's various studios. There's a lot of emotional baggage on the playing field here, and one has to assume it risks seeping into the work.

Countless other questions remain before Obsidian's new fallout

More specifically, beyond Josh Sawyer, the survivor New Vegas the pedigree is likely thinner than fans might like, though not entirely barren. Lead creative designer John Gonzalez – the writer behind Mr. House, Benny and Yes Man – joined Obsidian in early 2025 with a sharp “No, it's not FNV2” tacked to the announcement. But that disclaimer comes before all of that Fall-out pivot and may now be worth nothing.

The same goes for Tim Cain, co-creator of the original Fall-outwho also joined Obsidian full-time back in December 2025. According to his return-to-work announcement video, he was confident at the time that his mysterious project was something no one would guess—but then again, that was said long before this new studio path was carved. As such, his place in all of this is completely up in the air, although he hasn't mentioned anything via YouTube about the situation, and his latest video is also from July 8th.

Obsidian's voice will matter either way

The last truly troubling detail skewing this news has to do with Obsidian's internal drive to make another Fall-out game, as several comments from people over the past few years paint the picture a little less brilliantly. Josh Sawyer previously said he would take on one Fall-out games if Microsoft asked and if he could do it on his own terms – but it's hard to imagine those terms ever including a gutted team. More recently, he has downplayed his agency on the matter altogether, noting that there are “titans above” him who decide what happens to 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 well be read as PR gloss, but even taken with the necessary pinch of salt, a forceful redirection from high to a Bethesda-owned franchise right on the heels of the announcement still isn't the triumphant Homecoming fans might have wanted from all of this. And should that be a truly worst-case scenario, Obsidian might not even have the agency to do anything good, given the layoffs and Xbox's new, much more “hands-on” approach.

There is one lone bit of confusing kismet that comes out of this situation, and that is the multiple mixed messages that preceded the Xbox restructure. According to several sources, Sawyer already directed a canceled RPG that was either structurally or thematically close Fall-outor completely tied to the franchise. If true, this pivot may be less of a cold start than it first appears.

An extremely tense tension about fallout

Despite all these concerns, and very real anger and regret on behalf of developers who – no doubt – work hard to make great games, it's worth internally reconciling that the plan for a new Obsidian Fall-out remains intoxicating almost because of how impossible it seemed. For a large part of the fans, New Vegas remains the high water mark for Fall-out franchise (at least beyond the isometric perspective) – the spin-off that wrote the very game it was built on top of. Returning the Wasteland to Sawyer is a full circle that fans have literally been asking for for over years.

And I'll admit that consumerism has something to do with it, at least on my part; The Elder Scrolls 6 is still years away, and a main line Fallout 5 did not realistically land until well into the 2030s. This twist might remedy that, but none of this resolves the central tension here, regardless: this is the game that a good number of us have wanted for over a decade, and it's showing up wrapped in exactly the conditions that are likely to sink it. So for now, despite some valid reason to be excited, the only sensible move from the fan side seems to be to hope hard and expect absolutely nothing.