We at NerdLeaks have been tracking a dramatic development in Xbox's first-party strategy: Obsidian Entertainment is allegedly working on a new Fallout game, and the project was reportedly ordered from above rather than born as a studio passion project. Take this with a pinch of salt, but the claims circulating right now paint a sharp picture of how recent leadership and business shifts might be reshaping big-budget RPG roadmaps.
What Was Reported
Per Game Rant, which cites a Bloomberg piece by Jason Schreier, the most important claims are:
- Obsidian has been put to work on a new Fallout title, a project that was not planned until recently and is still in its early stages, if these reports are accurate.
- The move to prioritize Fallout was allegedly a directive from Xbox's new CEO, Asha Sharma, following the departure of Phil Spencer in February 2026.
- Josh Sawyer — noted for serving as project director on Fallout: New Vegas and as a lead on the Pillars of Eternity games — is reportedly directing this new project. Game Rant adds that every game on Sawyer’s resume has been at least "good."
- Reports claim Obsidian recently lost roughly 25% of its staff amid broader Xbox restructuring, and the studio's focus has shifted toward established franchises.
- A reported consequence is that a sequel to Avowed and other unnamed projects have seemingly been canceled or deprioritized, with only a “very small team” reportedly keeping an Avowed 2 effort alive in a minimal capacity.
- Bethesda Game Studios is allegedly partnering with Obsidian on the new Fallout project.
- Microsoft's Xbox division has not confirmed these claims, and Game Rant cautions that none of this has been officially confirmed by Microsoft.
The Source & Credibility
We are reporting these assertions because Game Rant relayed them from Jason Schreier's Bloomberg reporting. Per Game Rant, Schreier’s piece revealed the project's existence and much of the surrounding context. That said, the coverage itself stresses uncertainty: Xbox has made no official confirmations, and the details appear to be early and possibly fluid.
There are multiple layers here worth noting: the leak ties the pivot directly to corporate leadership changes and commercial performance — specifically mentioning the disappointing sales of Avowed and The Outer Worlds 2 as motivating factors — and attributes the studio reshuffle and layoffs to a strategy of consolidating resources around established, safer franchises.
In short, these claims come via established industry reporting channels, but they remain unverified by Microsoft. As always with leaks of this scale, we advise readers to treat the information as credible but not definitive — if true, it’s big news; if erroneous, it could be early rumor noise.
What It Could Mean
If these allegations hold up, there are immediate implications for both Obsidian and the broader Xbox ecosystem. First, a forced pivot toward a major franchise like Fallout suggests Xbox leadership is pulling teams toward lower-risk, high-recognition IP rather than original properties. That aligns with the reported decision to reduce Game Pass Ultimate prices being one of Asha Sharma’s early moves, illustrating a broader commercial reorientation.
For Obsidian, the reported 25% staff reduction and cancellation or shelving of titles like an Avowed sequel would mean fewer simultaneous internal projects and a heavy concentration of talent on franchise work. The presence of Josh Sawyer at the reported helm, if accurate, is a notable creative signal — Sawyer’s pedigree on Fallout: New Vegas and the Pillars of Eternity series gives weight to the quality potential of any Obsidian-led RPG.
Finally, the purported collaboration with Bethesda Game Studios could indicate resource sharing between Xbox’s internal teams when tackling a marquee franchise. How that partnership would play out is not detailed in the current reports, and there is mention of an earlier, separate Fallout cancellation in early 2026 whose connection to this effort is unclear.
Why This Matters
This leak matters because, if accurate, it signals a strategic turning point: major studios being reassigned to established franchises under new executive direction, layoffs trimming projects, and potential cancellations of original ambitious RPGs. For players, the headline-grabbing part is the idea that Obsidian — a studio known for narrative-driven RPGs — could be shaping the next traditional Fallout entry, purportedly with Josh Sawyer involved and in partnership with Bethesda.
For the industry, the story highlights how leadership changes and commercial performance can ripple quickly through studio roadmaps. We’ll continue to follow this closely and will update readers as more verifiable information becomes available. Until then, take these claims with a pinch of salt — they are significant if true, but not yet confirmed by Xbox.
