Obsidian Entertainment, the Xbox Game Studios developer behind The Outer Worlds, Avowed and Grounded, reportedly cut roughly 25% of its staff during the latest round of layoffs at Xbox, with between 60 and 70 employees dismissed, sources told Kotaku.
Scope and roles affected
The layoffs touched nearly every department at the studio, including production, art, programming, design, writing, quality assurance and recruiting. Among those impacted were long-serving developers with more than a decade at Obsidian, the report said, including the art director for The Outer Worlds and the studio’s sole recruiter.
When the cuts occurred and next steps
Sources indicated most of the layoffs happened on Monday, June 6, while some employees were informed they will leave in a later wave. The reductions are part of the first phase of a broader Microsoft restructuring that is expected to eliminate thousands of positions over the coming fiscal year.
Employees who remain at Obsidian had not been given clear guidance on how active projects will be reorganized following the personnel reductions. Company leadership is expected to provide further information at an all-hands meeting scheduled for Monday, June 7.
Active projects to continue
Despite the staff cuts, work on Grounded 2—currently in early access—and on a DLC for The Outer Worlds 2 is expected to proceed, according to the report. Plans for other Obsidian projects were described as uncertain pending internal updates.
Microsoft response and wider context
Microsoft did not comment to Kotaku about the specifics of the Obsidian layoffs. The studio’s reductions mirror a larger restructuring within Xbox that has already affected multiple internal teams and is being carried out to lower costs and refocus development investments.
Obsidian’s history within Xbox
Founded in 2003 by former Black Isle Studios members, Obsidian established itself as a major Western RPG developer. Its catalogue includes Star Wars: Knights of the Old Republic II, Neverwinter Nights 2, Alpha Protocol, Fallout: New Vegas, Pillars of Eternity, and more recent titles such as The Outer Worlds, Pentiment, Grounded and Avowed.
