A significant restructuring at Xbox has resulted in Obsidian Entertainment being placed under the management of Bethesda, with assurances from Bethesda’s president that the well-known RPG studio will maintain its “creative identity.” This merger is part of a larger reorganisation process that started earlier this year at Xbox.
Major Restructuring and Reductions
Xbox initiated a major overhaul this year by laying off 1,600 employees and severing ties with five of its first-party developers. The reorganisation advanced this week with an additional 268 job cuts within the division and significant studio transitions within Microsoft’s gaming segments. Notably, Halo, Rare, and World’s Edge have been transferred to Activision’s management, while Obsidian Entertainment now joins Bethesda, all of which were previously part of Xbox Game Studios.
Reassurances Amidst Concerns
Despite concerns from fans about Obsidian’s potential relegation to a support role, especially as it collaborates with Bethesda Game Studios on a new Fallout title, Bethesda president Jill Braff sought to allay fears. In an email to staff, Braff emphasised that Obsidian’s unique creative strengths would be preserved. CEO Feargus Urquhart and the leadership team at Obsidian will continue to helm the studio, which will report directly to Braff. Fallout franchise leadership will stay with Bethesda Game Studios. The email further elaborated that the teams would continue their collaboration on the new Fallout project, promising more details in the future.
Focus on Franchise-led Strategy
Earlier this summer, Xbox’s mass layoffs resulted in Obsidian losing about 25% of its employees and cancelling several projects in development. The company’s shift towards a “franchise-led model” appears to be the driving force behind these changes. Previous Xbox management had a more relaxed approach with its studios, but the new CEO, Asha Sharma, has expressed the importance of prioritising the company’s key franchises, like The Elder Scrolls, Halo, and Fallout. Some of Obsidian’s recent titles, such as Avowed and The Outer Worlds 2, reportedly did not meet performance expectations, which may explain the focus on revitalising the Fallout franchise.
Reporting based on coverage first published by eurogamer.net.