According to The Game Business, Obsidian Entertainment, the developers behind Fallout: New Vegas, The Outer Worlds 1 & 2, Grounded 1& 2, Avowed, and more are reportedly part of the list of potential studio closures at XBOX as part of Microsoft’s gaming division’s reset. However, that seems to be incorrect. Bloomberg’s Jason Schreier said that is not the case.
Before the news regarding Obsidian’s potential risk of closure, Arkane, the developers behind Dishonored, Deathloop, Marvel’s Blade, and Undead Labs, developers behind State of Decay, were added to the list, joining Compulsion Games, Double Fine, and Ninja Theory. If it were to be true, that would most likely mean the cancellation of both Marvel’s Blade and State of Decay 3.
Despite a report this morning, I can confirm that Obsidian is *not* in negotiations to avoid shutting down. Plenty of details are still up in the air surrounding the layoffs (picture will be clear on Monday) but Xbox is keeping Obsidian, according to people familiar with the situation.
— Jason Schreier (@jasonschreier.bsky.social) July 2, 2026 at 7:24 AM
Following the release of The Game Business’ report earlier this morning, Schreier took to social media setting the record straight. He also talked about what he heard with Microsoft’s plans for XBOX. In his report on YouTube, Schreier said, “the word bloodbath has been thrown around among people I talk to who know about what’s going to happen. It’s going to be bad.”
jfc, I just got word of a list of Xbox studio closures (no, not posting them). If it’s even close to true (and it’s from inside) this will likely be the largest single layoff event in gaming history.
Xbox is going to be supremely unpopular for a very long time and the… https://t.co/F13yU1Vj2K
— George Broussard (@georgebsocial) June 30, 2026
This is a similar sentiment from other insiders who believe that the upcoming studio closures will likely be the largest single layoff event in gaming history.