New Fallout Game in Development at Obsidian Amid Layoffs

Obsidian's next Fallout project just got greenlit, but the timing tells a messier story than the headline.

Bloomberg has confirmed that Obsidian Entertainment is working on a new game set in the Fallout universe. And a lot of people are already calling it Fallout: New Vegas 2. Before you get too excited, though, you should know this news comes wrapped in a pretty bitter context.

This announcement lands right after Obsidian got hit hard by the latest round of Microsoft and Xbox layoffs, with roughly a quarter of the studio's staff let go over the past week. So while you're getting the game you've wanted for over a decade, you're getting it at the expense of a lot of people losing their jobs.

 It's the kind of good-news/bad-news combo that's hard to feel good about. According to Bloomberg's Jason Schreier, this new project was greenlit specifically because of the restructuring underway at Obsidian. A handful of other projects were scrapped to make room for it, including a sequel to last year's Avowed and a separate Fallout-inspired RPG led by game director Josh Sawyer.

That second detail is the one turning heads, because Sawyer was the original director behind Fallout: New Vegas back when it released. Now that he's been moved onto this new title, you can see why so many fans are jumping straight to calling it Fallout: New Vegas 2.

Schreier described Sawyer's now-canceled project as something that shared a lot of structural and thematic DNA with Fallout, without technically being part of the franchise. So in a way, you're not getting a brand-new idea — you're getting Sawyer's existing vision reworked into an actual Fallout game.

Whether it ends up being called Fallout: New Vegas 2 or lands as more of a spiritual successor is still up in the air.

There's a real chance it keeps the name, given how much weight that subseries carries, especially after the setting played such a big role in Fallout Season 2 on Amazon. Having Sawyer back involved should at least make this feel more in line with the original New Vegas than some of Obsidian's recent output.

Interestingly, The Outer Worlds 2 is one of the few non-Fallout projects surviving the shuffle; Obsidian is actively continuing full development on the sequel alongside Grounded 2. Avowed 2, however, didn't make the cut. Despite progressing smoothly behind the scenes following last year's release, the sequel has been shelved so its team can be pulled off to work on this new Fallout title instead.

Though rumors suggest Obsidian is already looking for ways to re-pitch it down the line. So why is this happening now, in the middle of all this upheaval? A lot of it traces back to Xbox head Asha Sharma and her push toward leaning harder into franchise development.

Even in the earliest announcements about Xbox's restructuring, there was talk about the company not getting enough value out of its biggest IPs.  Based on the leaks and official statements so far, you can expect the focus going forward to center on the big names.

Fallout, Elder Scrolls, Gears of War, Halo — basically anything with major brand recognition under the Microsoft umbrella.

It actually makes a lot of sense for this to fall on Obsidian specifically. They've already made a Fallout game before, and reports from a few years back claim they pitched New Vegas-style follow-ups to Bethesda before Microsoft's acquisition, only to get turned down.

That same report mentioned they'd also floated an Elder Scrolls spin-off, which might actually happen eventually under Xbox's new direction, just probably not through Obsidian. There's also a collaboration angle here worth mentioning — Bethesda Game Studios, the team behind Fallout 3, Fallout 4, and Fallout 76, is reportedly involved in some capacity.

Obsidian is still the lead developer, but Bethesda's contribution is expected to help somewhere. If you had to guess, it probably comes down to the engine. Obsidian's been building its recent RPGs on Unreal Engine, but if Microsoft wants this new Fallout project turned around quickly, it'll likely follow the same playbook as the original New Vegas: build on top of an existing Fallout foundation.

In this case, probably Fallout 4 or Fallout 76 — rather than starting from scratch. You can want this game and still feel uneasy about how it came together. It's not that good things can't come out of bad circumstances, but watching Obsidian take major cuts after years of solid output for Microsoft, only to get handed a big franchise project seemingly as a survival move, doesn't sit right.

The original Fallout: New Vegas wasn't made under ideal conditions either.

That game was built in about 18 months, which is exactly why it launched buggy. It came together that fast, partly because it reused a lot of assets from the Fallout 3 engine, and partly because many of the ideas already existed. Several Obsidian developers had worked on an earlier, unreleased version of Fallout 3 back when they were still at Black Isle, and New Vegas gave them a chance to finally realize that vision within Bethesda's framework.

The hope here is that history doesn't repeat itself in the worst way. Ideally, this doesn't turn into a rushed cash grab, and Josh Sawyer's team actually gets the time, budget, and support to build something worthy of following up on one of the best RPGs ever made.

Sawyer's presence matters a lot here because The Outer Worlds and Avowed, while both solid games in their own right, were never really chasing the same identity as New Vegas. They leaned more into combat and gunplay, whereas New Vegas was always about the choices you made and the world you were navigating.

Regardless of who ends up making it, a new Fallout title clearly serves a purpose right now. Fallout 5 is still a long way off if Bethesda Game Studios is handling it, and without spin-offs to fill that gap, it makes sense for outside studios to step in — especially with a hit TV show currently driving so much renewed interest in the franchise.

Bethesda has historically been cautious about greenlighting spin-off titles.

That's entirely their call since they own the IP. Still, you'd hope this project exists because Obsidian genuinely wants to make it, not because it was forced on them as a corporate lifeline. A game built purely out of obligation isn't really worth the decade-plus wait.

What is certain is that more Fallout content is coming regardless. Alongside this new Obsidian project, there are also strong rumors pointing to remasters of both Fallout 3 and Fallout: New Vegas, which could end up bridging the gap while everyone waits on Bethesda to eventually deliver a true Fallout 5.

Not every studio caught up in Microsoft's cuts has been lucky enough to land a project like this one, either — id Software, for example, has reportedly been gutted and shifted into more of a support role despite having strong original pitches in the works. So while there's genuine reason to be excited about a new Fallout game landing on your radar, it's worth remembering the cost that came with getting there.