Obsidian Not Facing Closure, Reporter Confirms Amid Xbox Cuts

Reports circulated that Xbox may close developer Obsidian. Reporter Jason Schreier posted that he can confirm Obsidian is not in negotiations to be shut down.

A recent industry report named several Xbox-owned studios as negotiating with Microsoft to avoid closure. The report listed Compulsion, Arkane, Double Fine, Ninja Theory, Undead Labs and Obsidian, and said senior leadership is pushing for faster, more cost-conscious development following changes under CEO Asha Sharma.

The report attributed the shift in part to weaker revenue from some top-selling franchises, which has increased pressure on the wider games division’s finances. It said some studio leaders believe external consultants and a greater emphasis on speed are influencing decisions about projects and staffing.

Obsidian released three titles last year — Avowed, Grounded 2 and The Outer Worlds 2 — which received generally positive reviews but did not achieve blockbuster sales figures.

On a social platform, Jason Schreier wrote: “I can confirm Obsidian is not in negotiations to avoid shutting down,” and added that details around recent layoffs and broader studio changes remain unclear. He said the full picture should become clearer on Monday and that Xbox is keeping Obsidian.

Obsidian is known for Fallout: New Vegas and for developing role-playing games. Microsoft’s Xbox division has been reshaping its studio strategy this year, with multiple reports of possible sales, closures and layoffs affecting first-party and smaller teams. Company officials have not provided a full account of which studios will be retained, sold or closed, and industry observers are awaiting further confirmations in the coming days.