Obsidian Entertainment Is Officially Moving Under Bethesda As It Works On Its New Fallout Game - Kotaku

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The RPG powerhouse has been rehoused

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By Ethan Gach Published September 22, 2026 | Comments (24) | 𝕏

Obsidian Entertainment is moving under Bethesda amid a larger restructuring of Xbox Game Studios. The evolving corporate structure will see the maker of Avowed and The Outer Worlds housed alongside Bethesda Game Studios as it works on an upcoming Fallout game.

Microsoft chief content officer Matt Booty wrote in a blog post on September 22 that Obsidian’s work on its current projects, including Grounded, would continue, though he did not make any mention of the studio’s other franchises, including an Avowed sequel the studio had previously wanted to make.

Founded back in 2003, Obsidian established itself as an RPG powerhouse first by partnering with BioWare on Star Wars Knights of the Old Republic II: The Sith Lords and later by teaming up with Bethesda on Fallout: New Vegas. Then, in the 2010s, it crowdfunded an original isometric RPG called Pillars of Eternity and later shipped a Fallout-style sci-fi shooter RPG called The Outer Worlds. Obsidian was purchased by Microsoft in 2018 as part of the Xbox maker’s new content strategy around its Game Pass subscription service.

Nearly a decade later, that strategy has failed, and Microsoft is making major changes to the Xbox Game Studios apparatus it built to support it. That shift includes focusing more of its resources on fewer big blockbuster franchises like Diablo, The Elder Scrolls, and Fallout. Already reportedly at work planning out Avowed 2, Obsidian has now been tasked with making a new Fallout game as part of last summer’s Xbox “reset.”

Remasters of Fallout 3 and New Vegas are also coming in the future, while Fallout 5 remains in pre-production at Bethesda.