Obsidian Entertainment is canceling its planned Avowed sequel and laying off 52 staff members as part of a major studio restructuring. This shift matters because it signals a strategic pivot away from the Avowed franchise toward other Xbox-owned intellectual properties. The changes affect both the future of the game series and the livelihoods of a quarter of the developer's workforce.
Obsidian Entertainment cancels Avowed sequel and lays off staff
The cancellation stems from internal strategic decisions rather than development failures. Bloomberg reports that progress on the canceled Avowed sequel was going well and on track to be announced within the next year. However, the project ultimately did not fit into Xbox CEO Asha Sharma’s overall strategy for the studio.
Obsidian has simultaneously started development on a new Fallout title led by Josh Sawyer. The studio also confirmed it will continue developing DLC for The Outer Worlds 2 and work on Grounded 2. These projects represent the immediate focus for the remaining development teams at the studio.
The layoffs were indicated by a WARN notice filed by the company, which reported a reduction of 52 employees. This number represents approximately a quarter of the studio's total staff. Some Obsidian Entertainment employees will reportedly continue to work on the Avowed sequels temporarily while waiting for new projects such as Fallout to be ready.
We looked at the last Avowed update earlier while tracking Obsidian's development direction. The studio's current path prioritizes established franchises over new IP expansion in the short term. The cancellation of the Avowed sequel marks a definitive end to that specific project line.
Source: Bloomberg, Gematsu
