The major Xbox restructure continues, and this time it impacts Obsidian Entertainment. The studio behind Pillars of Eternity, The Outer Worlds, and most recently Avowed is moving organizationally to Bethesda and will become part of the internal “Fallout” corporate group. Eurogamer and IGN both report this on September 23, 2026.
Bethesda head Jill Braff informed Obsidian staff via an internal memo on the same day. In it, she assured employees that the studio's creative identity would be preserved despite the new reporting structure. This means Obsidian will continue to work independently on its projects, even if the organizational reporting line will now go through Bethesda's Fallout division instead of directly through Xbox Game Studios.
Why is Obsidian moving specifically to the Fallout division?
Historically, this assignment actually makes good sense: Obsidian developed Fallout: New Vegas, one of the series' most popular spin-offs, back in 2010, long before Microsoft acquired the studio in 2018. Against this backdrop, the new organizational proximity to the Fallout group seems almost logical rather than arbitrary. It also fits into a series of restructures we've reported on in recent weeks – such as the Xbox layoff wave with Activision taking over Halo or the rumors of another consolidation round. The “Xbox Reset” thus affects not only personnel but also the internal responsibilities of entire studios.
What does the change mean for Avowed and The Outer Worlds 2?
According to the available reports, the memo does not detail ongoing projects like The Outer Worlds 2. Neither Eurogamer nor IGN mention specific changes to release plans, team sizes, or studio locations. Nevertheless, it's important to note: unlike the recently reported Xbox layoffs, this is explicitly not about job cuts, but a pure organizational reallocation within the corporate structure. For fans, this means waiting for now. Whether the proximity to Bethesda will bring long-term content changes, for example, in marketing or release dates, cannot be reliably predicted at this time.
Nevertheless, it's remarkable how much reassurance Jill Braff apparently had to provide here. The fact that a studio head sends a dedicated memo to the entire staff to emphasize creative independence shows how sensitive such restructures are for employees – especially after a wave of closures and layoffs that has accompanied the Xbox division for months.
We will continue to follow the Xbox restructuring and report as soon as there is news regarding Obsidian's projects or further studio changes.
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