Bethesda Boss Issues Memo to Staff After Xbox Moves Obsidian Into the Fallout Company

The boss of Bethesda has issued a memo to staff reassuring them that Obsidian Entertainment remains “distinct” despite being absorbed into the company as part of this week’s seismic Xbox studios reorganisation.

This week, Microsoft announced hundreds more layoffs as it gutted Halo Studios and handed the next mainline Halo game, Sea of Thieves developer Rare, and Age of Empires developer World's Edge to Activision. Meanwhile, Obsidian, the Microsoft-owned studio behind the likes of Grounded, The Outer Worlds, and Avowed, was made a part of Bethesda.

Obsidian, perhaps most famous for developing the much-loved Fallout: New Vegas, was confirmed to be working on a Fallout game in the wake of new Xbox boss Asha Sharma’s “reset” of Microsoft’s gaming business, which has seen nearly 2,000 staff cut in a bid for improved financial performance. More staff are set to lose their jobs over the course of the rest of the current financial year.

Bringing Obsidian into the Bethesda fold makes sense given it’s working on Fallout, but some had worried the move signalled an eventual relegation to Fallout support studio status. But in a memo to staff viewed by IGN, Bethesda boss Jill Braff insisted Obsidian would retain its leadership and identity, while confirming Bethesda Game Studios would “continue to lead the Fallout franchise.”

Here’s the memo in full:

There is of course a huge amount going on at Bethesda right now, with The Elder Scrolls 6 the focus. Fallout 5 is in pre-production. BGS has also confirmed Fallout 3 and Fallout: New Vegas remasters are in the works. No release windows are known for any of these games, nor Obsidian’s Fallout game.

Meanwhile, BGS has said Starfield "continues," although Bethesda stopped short of confirming a sequel is in the works.

The Xbox “reset” has left Xbox Game Studios a shadow of its former self, with a number of previously owned studios either independent, moved into Activision or Bethesda, or set for closure. Will Gears of War studio The Coalition, which suffered layoffs this week, Clockwork Revolution developer inXile, and Fable and Forza Horizon developer Playground eventually also end up at either Activision or Bethesda?