Microsoft has been on a layoff spree across all of its divisions, including the XBOX. Recently, news broke that XBOX is looking for buyers for its various studios, like Ninja Theory, and will close them if no buyers come forward. Obsidian Entertainment was reportedly on the chopping block too, however, Jason Schreier reports that the studio is not being shut down by XBOX.
Avowed and The Outer Worlds 2 Studio Is Not Shutting Down
In a post on social media, Jason Schreier “confirmed” that Osidian Entertainment is not shutting down and XBOX intends to keep the studio. However, he added that nothing is certain about layoffs at the studio.
In 2025, Obsidian Entertainment released two big RPGs, Avowed and The Outer Worlds 2. However, both games failed to meet their financial or sales targets. Not to mention that the technical state of these games, as PC players experienced different errors and issues with them, such as the Out of Video Memory error or Fatal Error crashes.
However, Grounded 2 was a hit, which was also released in 2025 and was developed by the same studio. This game might be the reason why XBOX isn’t closing the studio.
Aside from these games, developing Fallout: New Vegas is the game the studio is most popular for. However, the studio is uncertain if they’ll get to make another Fallout.
These are uncertain times, not just at XBOX but in the gaming industry as a whole. A lot of studios and publishers are struggling to keep up with the rising cost of game development in the US.
Aside from laying off devs and closing studios, XBOX is also a console manufacturer. However, its priorities are shifting away from the console space, it seems, as next-gen Xbox games will be built for PCs. As per Microsoft, game studios will first develop games for PC and then move to the XBOX.
What do you think of Microsoft shutting down studios, laying off developers, and shifting its focus to PC? Let us know in the comments.
