Obsidian is now part of Bethesda's reporting structure. Leaked internal emails indicate that this adjustment primarily concerns reporting lines, with the studio retaining its creative identity and continuing to work on a new Fallout game. This change coincides with a new round of layoffs and internal restructuring at Xbox, drawing attention to Obsidian's future direction.
The email was reportedly sent to employees by Bethesda President Jill Braff. She stated that the creative identity and strengths that define Obsidian will remain central to the studio and its projects. CEO Feargus Urquhart and the existing leadership team will continue to manage Obsidian, but the studio will now report directly to Braff.
The email also clarified that Bethesda Game Studios will continue to lead the Fallout franchise. Obsidian and Bethesda announced earlier this year that they are collaborating on a new Fallout game, marking the first time the two studios have worked together on the series since Fallout: New Vegas 16 years ago.
Braff stated that both parties will advance the project based on their long-term partnership and the pre-production work already underway, with more information to be revealed in the coming months. She described this arrangement as part of Bethesda's ongoing strengthening of its "franchise-led" model, noting that the new structure aims to clarify responsibilities for both studios and game franchises.
Over the past several years, Obsidian has dedicated significant resources to its own titles, developing The Outer Worlds, Grounded, and Pentiment, while also bringing a new presentation style to the Pillars of Eternity series with Avowed. Previous behind-the-scenes reports claimed that Microsoft canceled the sequel to Avowed and redirected developers to the Fallout project, but this has not been officially confirmed.
Michael "Cromwelp" Douse, Publishing Director for Baldur's Gate 3, expressed concern about Obsidian moving under a competitor's umbrella. Rumors also suggest that around 25% of the studio's staff were laid off during this transition, though these figures currently come from external sources. Pre-production on the new Fallout project has already begun, with more details expected in the coming months.