Obsidian’s “creative identity and strengths” will remain intact, promises Bethesda, as it takes control of Fallout: New Vegas studio

Obsidian Entertainment has been moved under Bethesda Game Studios as part of a sweeping Xbox reorganization announced on September 22, 2026. The restructuring, which continues job cuts that began in July with 1,600 layoffs, eliminates a further 268 positions across Xbox divisions.

In response to employee concerns, Bethesda president Jill Braff issued a memo describing the move as “primarily a change in reporting structure.” She assured staff that Obsidian’s “creative identity and strengths that make Obsidian distinct” will remain intact, with CEO Feargus Urquhart and existing leadership continuing to guide the studio. The studio will operate as a “distinct” team within Bethesda.

The reorganization extends beyond Obsidian’s transition. The storied UK studio Rare and ownership of the Halo franchise were transferred to Activision, while Ninja Theory faces a proposed closure. The moves represent a significant reshuffling of Xbox’s internal structure, reflecting Microsoft’s franchise-led business model.

Obsidian, developer of Fallout: New Vegas, Grounded, Avowed, and The Outer Worlds, joins an increasingly consolidated gaming landscape. While leadership assurances suggest minimal operational disruption, the structural shift reflects broader industry trends toward consolidation and resource optimization within major publishers.

Sources

• Obsidian’s “creative identity and strengths” will remain intact, promises Bethesda, as it takes control of Fallout: New Vegas studio
• Report: Bethesda president tells Obsidian staff it won’t lose ‘creative identity’ after merge
• Bethesda boss confirms Obsidian will remain a “distinct” team
• Bethesda Boss Issues Memo to Staff After Xbox Moves Obsidian Into the Fallout Company
• Leaked Xbox Memo Reveals Obsidian’s Fate Under Bethesda