Xbox Kills Obsidian’s Avowed Sequel In The Wake Of Layoffs – Report
Microsoft’s massive workforce reduction has significantly impacted Xbox Game Studios, with approximately 4,800 layoffs across the company and 3,200 positions eliminated within Xbox specifically—the largest cut in Xbox’s history. As part of this restructuring, four studios have been separated from the company, and Obsidian Entertainment has been hit particularly hard, losing roughly 25% of its workforce.
The cuts have forced significant changes to Obsidian’s development pipeline. The studio had planned a sequel to its 2025 action-RPG Avowed, which has now been cancelled as a result of the layoffs. According to reports, Obsidian is facing uncertainty about how to proceed with a substantial backlog of projects, as the reduced team size makes execution increasingly challenging. Despite these setbacks, Obsidian had released three titles under Xbox in the previous year.
The restructuring extends beyond Obsidian, with Microsoft also reportedly negotiating with the French government regarding options for Arkane Lyon, the studio developing Marvel’s Blade. This broader reset at Xbox signals a significant strategic shift for the platform holder and represents one of the most severe periods of contraction in Xbox’s history.