Report: Obsidian losing around one quarter of its staff to ‘Xbox reset’

Obsidian Entertainment has laid off approximately 60-70 employees—roughly 25% of its 285-person workforce—as part of Microsoft’s broader Xbox restructuring that cuts 3,200 positions overall, with 1,600 cuts taking place today. The RPG studio, known for The Outer Worlds, Avowed, Grounded, and Pentiment, was notably absent from the initial layoff announcement but confirmed impacted through employee social media posts.

The cuts disproportionately affected senior staff, including the art director for The Outer Worlds and the studio’s only recruiter. Impacted employees ranged from a 21-year veteran artist to an engineer who had been with the company for just two months, highlighting the breadth of the reductions across all departments and experience levels.

The full impact on Obsidian’s projects remains unclear, though the studio has indicated that work continues on early-access title Grounded 2 and planned DLC for The Outer Worlds 2. The layoffs represent a significant setback for Obsidian, which had previously avoided the layoff waves that struck Xbox studios in the 2020s until this major restructuring.

Report: Obsidian losing around one quarter of its staff to ‘Xbox reset’

Sources