Obsidian Entertainment fans had a rough morning this week. A report claiming the beloved RPG studio was fighting for its life alongside several other Xbox teams sent the community into a full-blown panic.
The timing couldn’t have felt worse. Xbox is barreling toward a massive “reset” under CEO Asha Sharma, with layoffs and studio closures reportedly kicking off around July 6. Studios like Compulsion Games, Ninja Theory, Double Fine, and Undead Labs had already been named as being on shaky ground, and when Obsidian’s name got added to that list via a report from The Game Business, it felt like confirmation of fans’ worst fears.
After all, this is the studio that just delivered what Xbox itself called “The Year of Obsidian.” Avowed, The Outer Worlds 2, and Grounded 2 all launched within the same stretch, and Obsidian remains one of the few teams on the planet with real Fallout pedigree thanks to Fallout: New Vegas. Losing them to a corporate cost-cutting spree felt almost unthinkable.
Obsidian Shutdown Rumors Debunked By Bloomberg’s Jason Schreier
Here’s the good news fans have been waiting for. Bloomberg’s Jason Schreier stepped in shortly after the initial report spread and shut the panic down directly.
“Despite a report this morning, I can confirm that Obsidian is not in negotiations to avoid shutting down,” Schreier wrote on Bluesky. “Plenty of details are still up in the air surrounding the layoffs (picture will be clear on Monday) but Xbox is keeping Obsidian, according to people familiar with the situation.”
The Game Business, the outlet behind the original claim, acknowledged the Obsidian mention was a mistake and has since walked it back. Multiple other outlets, including Windows Central’s Jez Corden, echoed Schreier’s reporting, adding that their own sources never placed Obsidian among the at-risk studios in the first place.
That doesn’t mean everything at Xbox is calm right now. Broader layoffs are still expected across the business, and studios like Compulsion Games and Ninja Theory remain in far more precarious positions. But for Obsidian specifically, the message from multiple well-sourced reporters is consistent: the studio behind Fallout: New Vegas, Grounded, and Pillars of Eternity isn’t going anywhere.
Fans can expect a clearer picture of Xbox’s restructuring plans when the reported layoffs begin on July 6.
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