According to a new report from Bloomberg, Obsidian Entertainment has reportedly canceled Avowed 2 as the studio adjusts its development plans following Microsoft’s recent Xbox restructuring. The reported decision comes after the developer was affected by layoffs that are said to have reduced its workforce by around 25%, leading the studio to focus its resources on projects tied to larger and more established franchises.
Sources familiar with the matter claim that Obsidian had originally planned to expand the Avowed series with a sequel that would build on the technology and development work completed for the first game. Reusing existing tools and systems was expected to speed up production and help establish Avowed as a long-term RPG franchise. However, Bloomberg reports that the original game’s commercial performance fell short of expectations, resulting in the sequel being shelved.
The report also states that Avowed 2 was one of several projects affected during Microsoft’s recent changes across its Xbox studios. The move reportedly aligns with Xbox’s broader strategy of concentrating on franchises that have a stronger track record and greater long-term commercial potential.
Instead of continuing with Avowed 2, Obsidian is reportedly beginning work on a new Fallout game. The project is said to be led by Josh Sawyer, the veteran RPG designer best known for directing Fallout: New Vegas, which remains one of the most popular entries in the Fallout series among fans. Bloomberg also reports that Sawyer had previously been working on another role-playing project with similarities to Fallout, making the transition to the franchise a logical step.
According to the report, the studio’s current development plans include:
- Avowed 2 has reportedly been canceled following the first game’s weaker-than-expected commercial performance.
- A new Fallout game is reportedly in development under the leadership of Josh Sawyer.
- Several unannounced Obsidian projects have also reportedly been canceled as part of the Xbox restructuring.
- A small internal team will reportedly continue limited work on Avowed 2, keeping the project in a playable state if Microsoft decides to revisit the franchise in the future.
- Development of DLC for The Outer Worlds 2 will continue despite the reported project cancellations.
- Grounded 2 will continue receiving live-service content and post-launch support from its development team.
Although the majority of the studio’s attention is reportedly shifting toward Fallout, Bloomberg’s sources indicate that Obsidian has not completely abandoned Avowed. Maintaining a small team on the project could allow the studio to restart full production more quickly if future business conditions or player demand justify bringing the series back.
Neither Microsoft nor Obsidian Entertainment has officially confirmed the reported cancellation of Avowed 2 or the existence of a new Fallout project. Until either company makes a public announcement, the information should be treated as a report based on anonymous sources. Even so, if the report proves accurate, it marks a significant change in Obsidian’s development roadmap and suggests that the studio’s future will once again be closely tied to one of its most successful RPG franchises.
