We at NerdLeaks are reporting on a striking claim about Obsidian Entertainment’s next move: Obsidian is allegedly being shifted by Xbox to work on a new game in the Fallout franchise, and as part of that pivot the planned sequel to Avowed has been canceled, per coverage by Insider Gaming that cites reporting from Bloomberg's Jason Schreier. Take this with a pinch of salt, but if true it’s a major shakeup for the studio known for narrative RPGs.
What Was Reported
According to Insider Gaming, which relays a report from Jason Schreier at Bloomberg, Obsidian "will begin working on a new game in the popular Fallout franchise." The claim further names Josh Sawyer as the lead on this new project. Schreier is also cited as reporting that Sawyer "had been directing a roleplaying game that was similar structurally and thematically to Fallout but was not part of the franchise."
As part of the reported shift, Xbox has allegedly canceled an in-development sequel to Avowed. Per the reporting, work on the Avowed sequel was "going well" and was "on track to be announced within the next year," but was still pulled because it did not fit within the strategic plan put forward by Xbox CEO Asha Sharma, according to Schreier.
The Source & Credibility
We are flagging the provenance of these claims clearly: Insider Gaming is the outlet publishing the story and it attributes the core reporting to Jason Schreier at Bloomberg. Xbox reportedly declined Insider Gaming's request for comment. That chain of sourcing is important — take this with a pinch of salt until official confirmation arrives.
There are a few corroborating details in the reporting that lend context. The story notes that Obsidian previously developed Fallout: New Vegas with Bethesda as publisher, and that Sawyer was the director on that title. The report also ties the move to wider corporate activity at Xbox: Insider Gaming notes a large-scale round of layoffs at the company and reports that at least 52 people were let go from Obsidian. Per the coverage, Xbox announced its biggest single layoff in company history earlier this week, with a named figure of 1,600 people let go on one date and another 1,600 planned to be cut across the rest of the fiscal year.
What It Could Mean
If true, this would be a significant strategic shift for Obsidian. The studio has been tied to original projects and RPG efforts, and the report suggests that work on the Avowed sequel was progressing well enough to be near announcement — allegations that make the decision to cancel feel notable and possibly contentious.
Having Josh Sawyer lead a Fallout project is a headline-grabbing detail, too. Sawyer’s past role directing Fallout: New Vegas is explicitly mentioned in the reporting, and the claim that he was previously directing a non-Fallout RPG "similar structurally and thematically to Fallout" raises questions about whether the new assignment reuses existing work or represents an entirely new direction under franchise supervision. Again, these are reported details — take them as alleged for now.
There’s also an operational angle here: the report ties these studio-level decisions to wider company restructuring at Xbox. The cancellation of the Avowed sequel is framed as not aligning with Asha Sharma's plan for the platform’s studios, per the reporting. That suggests the change may be less about project health and more about corporate strategy, if the sourcing is accurate.
Why This Matters
This story matters because it touches on several industry hot-buttons: the stewardship of beloved franchises, the fate of high-profile original IP, and how corporate strategy can reshape studio roadmaps. If Obsidian is indeed being reassigned to a Fallout project and Avowed's sequel has been canceled despite reportedly being "going well," it raises questions about creative autonomy and the direction of Xbox's first-party portfolio — assuming, of course, the report is accurate.
We will be watching for official statements or further reporting to verify these claims. For now, treat this as a significant rumor backed by named reporting from Jason Schreier at Bloomberg and published via Insider Gaming, but remember: until Obsidian or Xbox confirm, these remain alleged developments.
