A new Fallout game from Obsidian Entertainment is reportedly in development, with the studio canceling its plans for an Avowed sequel to make it happen. The project is being led by Josh Sawyer, the designer behind Fallout 3 and project director on Fallout: New Vegas, widely considered the high point of the entire franchise.
The Avowed sequel that won't be
Avowed launched in February 2025 and built a solid fanbase, so news of its sequel being shelved will sting for fans of Obsidian's fantasy RPG. A small team is reportedly being kept on to maintain the possibility of reviving Avowed 2 later, but that's very much a back-burner situation. The studio's primary energy is now pointed squarely at the Fallout project.
This isn't just a creative pivot. It's part of Xbox's broader restructuring, which has resulted in roughly 3,200 layoffs across Microsoft's gaming division. Obsidian took a significant hit, with about a quarter of its staff let go. Other first-party teams were affected too, including Undead Labs, which is reportedly being separated from the State of Decay 3 project entirely.
Why Sawyer leading this matters
Here's the thing: the choice of Josh Sawyer to head this project is the most meaningful detail in this entire story. Sawyer was lead designer and project director on Fallout: New Vegas, the game that most hardcore Fallout fans point to when they talk about what the series can be at its best. His design philosophy, built around reactive storytelling, meaningful faction choices, and player agency, is exactly what the franchise has been missing.
Sawyer was reportedly already working on an unannounced RPG with structural similarities to Fallout before this shift. The implication is that his project got absorbed into the new Fallout game rather than being built from scratch, which could mean development is further along than the announcement suggests.
Bethesda will collaborate on the project. That matters because Bethesda holds the franchise keys and has overseen Fallout for nearly two decades, but their own studio is deep in Elder Scrolls 6 development, a game that is reportedly still at least two years from release. Handing Fallout to Obsidian is the only realistic way to get a new entry in the franchise before the mid-2030s.
The franchise gap that made this inevitable
Fallout 4 came out in 2015. Fallout 76 followed in 2018 as an online multiplayer game that divided the community hard. Since then, the only major Fallout content has been the Prime Video TV series, which has been a genuine hit and reignited mainstream interest in the IP.
That TV success created a problem and an opportunity at the same time. Millions of new fans discovered Fallout through the show and immediately went looking for a single-player RPG to play. What they found was a decade-old game and an online title that isn't quite what most of them were after. The demand for a new, story-driven Fallout is real and measurable.
What this means for Obsidian's identity
Obsidian has spent years building out its own IP. Pillars of Eternity, The Outer Worlds, and Avowed all represent the studio trying to own its creative space rather than being a work-for-hire RPG developer. Shifting back to a licensed franchise, even one as beloved as Fallout, represents a real change in direction for the studio.
The key here is that Sawyer's involvement makes this feel less like Obsidian being assigned a task and more like the right person landing on the right project. New Vegas happened because Obsidian had genuine creative freedom within Bethesda's framework. If that same structure holds, the result could be something special.
For players who want to revisit the franchise's roots while waiting for whatever comes next, the Fallout 3 guides are worth checking out, and the broader gaming guides library covers the rest of the Fallout back catalog if you're catching up before the new game eventually arrives.
