Obsidian Entertainment, the studio behind the beloved Fallout: New Vegas, is reportedly shifting its focus from a sequel to Avowed to work on a new installment in the Fallout franchise. According to the IGN Daily Fix, developer Josh Sawyer — who served as lead designer on Fallout: New Vegas — will head a team at Obsidian dedicated to the next Fallout game. The move is described as part of a “big reset” at Xbox.

The report states that Obsidian is “reportedly ditching Avowed 2” in favor of the new Fallout project. While Microsoft has not made an official announcement, the news has generated significant buzz among fans who have long called for Obsidian to return to the series they helped define in 2010.

A long wait for a single-player Fallout

The last mainline single-player Fallout game, Fallout 4, was released by Bethesda Game Studios in 2015. Since then, the franchise has continued through the multiplayer-focused Fallout 76 (released in 2018) and the critically acclaimed Fallout television series produced for Amazon Prime Video. The show, which debuted in 2024, reignited interest in the post-apocalyptic universe, bringing new players into the fold and reminding longtime fans what they loved about the world.

Bethesda itself has not announced a direct sequel to Fallout 4. Studio director Todd Howard has stated in past interviews that a new single-player Fallout is on the roadmap, but the studio’s immediate attention has been on Starfield and the upcoming The Elder Scrolls 6. That leaves room for Obsidian, a sibling studio under the Xbox Game Studios umbrella, to step in and deliver the next chapter.

Josh Sawyer’s return to the Wasteland

Josh Sawyer is perhaps best known among Fallout fans as the project director and lead designer of Fallout: New Vegas, which remains a high-water mark for the series in terms of writing, player choice, and role-playing depth. After New Vegas, Sawyer worked on Pillars of Eternity and Pentiment at Obsidian, both of which earned praise for their narrative focus. His reported involvement in the new Fallout project has already raised expectations for a game that could recapture the branching storytelling fans have missed.

The decision to have Sawyer lead the effort signals that Xbox is betting on Obsidian’s proven ability to handle the franchise. It also suggests that the company sees value in keeping multiple studios within the organization working on different angles of the same intellectual property — a model similar to how Microsoft has managed the Halo universe in the past.

The broader Xbox reset

The news about Obsidian’s new Fallout game arrives against a backdrop of widespread restructuring at Xbox and its associated studios. The IGN Daily Fix report indicates that id Software, the studio behind Doom and Quake, was not spared during the “big Xbox reset.” More than half of id Software’s full-time staff were laid off. The developer had been working on pitches for a new Perfect Dark game, among other projects, and had recently released the well-received Doom: The Dark Ages.

Layoffs at id Software are particularly striking given the studio’s status as a premier first-person shooter developer. The loss of more than half of its full-time team raises questions about the future of the Perfect Dark reboot, which has already faced development challenges since The Initiative handed the project to Crystal Dynamics.

Morale crisis at Bethesda

Perhaps the most troubling sign from the report concerns Bethesda Game Studios itself. According to the briefing, morale at Bethesda is “shattered” in the wake of Xbox’s recent mass layoffs. The remaining developers reportedly warned that the layoffs will have a “substantial and cascading effect” on The Elder Scrolls 6, which has been in pre-production for years and is expected to be one of the most important releases of the decade.

This is not the first time Elder Scrolls 6 has faced headwinds. The game was announced in 2018 with a short teaser, and Bethesda has since released Starfield and the next-generation update for Fallout 4. The studio has been tight-lipped about concrete release timing, but any further delays or reductions in team morale could push the game even further out.

What this means for gamers

The prospect of a new single-player Fallout game from Obsidian, led by Josh Sawyer, is the kind of news that fans have been hoping for since Fallout 4 ended its DLC cycle. The studio’s track record with New Vegas gives it a distinct advantage in crafting a narrative-heavy experience that prioritizes player agency. At the same time, the turbulence at id Software and the reported morale problems at Bethesda suggest that Microsoft’s studio restructuring is not without side effects.

If the report holds true, Obsidian’s Fallout could be years away. The studio is currently completing Avowed, an RPG set in the Pillars of Eternity universe, which is expected to release in 2025. Even if Avowed 2 has been shelved, the new Fallout project is likely in early pre-production. Still, the confirmation that a dedicated team is working on it — and that Sawyer is at the helm — is enough to keep hope alive.

For now, the biggest takeaway is that Xbox is making hard choices about where to direct its resources. Picking Obsidian to carry the torch on Fallout is a bold bet, but one with a strong foundation. Whether the broader restructuring pays off will depend on how well the remaining teams can hold together under pressure.