Xbox has axed a sequel to Avowed at Obsidian Entertainment following widespread studio layoffs across the company. Bloomberg reports that roughly 25 percent of Obsidian's workforce faces termination as part of Xbox's ongoing restructuring under new leadership.
The cancelled Avowed sequel represents a significant shift in strategy for Obsidian, which launched the original action-RPG in 2025 to solid player reception. The studio now pivots toward development of a new Fallout game, signaling Xbox's determination to prioritize established franchises over original IP sequels.
Obsidian Entertainment, known for The Outer Worlds, Baldur's Gate 3 companion content, and the New Vegas legacy, becomes collateral damage in Xbox's broader reset. The company has already shuttered Tango Gameworks and Arkane Austin while consolidating other studios under renewed focus on Game Pass and franchise tentpoles.
The Avowed cancellation stings particularly hard given the 2025 game's underrated status. It carved out a devoted following despite not matching commercial expectations, making the sequel's kill an easy cost-cutting target during restructuring. Xbox's playbook now favors safe bets. Fallout, which spawned a successful TV adaptation and maintains active player bases across multiple titles, presents less perceived risk than expanding Avowed's universe.
This move reflects the post-ABK integration chaos continuing to plague Xbox. Leadership shifts, Game Pass sustainability concerns, and pressure to cut costs have created instability across the publisher's first-party studios. Obsidian loses momentum on a project its team championed while facing skeleton crew operations ahead.
For players, the Avowed cancellation closes the book on a franchise that deserved continuation. For Xbox, it's another calculated sacrifice in a strategy that prioritizes franchise consolidation and profitability over artistic risk