Obsidian Director Responds to Fallout Rumors After Xbox Layoffs

In the middle of another round of Xbox restructuring, Obsidian’s leadership is pushing back against online speculation—particularly claims that the studio can’t handle a rumored new Fallout project. In a LinkedIn post, Obsidian director Brandon Adler also used the moment to recognize colleagues impacted by the cuts and to call out what he described as a surge of misinformation.

Adler addresses layoffs—and the backlash around a new Fallout project

Obsidian game director Brandon Adler marked the week by saying farewell to dozens of colleagues who were laid off as part of Microsoft’s latest Xbox job cuts. In the same message, he turned to what he called another difficult aspect: criticism circulating online about the studio.

The controversy is tied to reports that Obsidian is working on another Fallout game. Adler said he takes issue with an “enormous amount of misinformation” being shared, especially skepticism from fans who question whether Obsidian can do the job justice. Much of that doubt stems from the fact that many of the developers associated with Fallout: New Vegas are no longer at the studio.

Adler’s core response is that such claims are being made without a clear understanding of who has worked on Obsidian’s prior projects or what those contributors added. He framed the criticism as not only wrong, but also harmful in how it spreads inaccurate information about the studio’s current capabilities.

What the restructuring changed at Obsidian

Microsoft announced the next wave of Xbox restructuring on July 6, with Xbox CEO Asha Sharma confirming plans to eliminate about 3,200 jobs—roughly 20% of the division’s workforce. The company said it had already identified and notified half of the affected employees, with the remaining layoffs expected by the end of June 2027.

For Obsidian specifically, reports indicate the studio lost about a quarter of its workforce, which was roughly 220 people. Microsoft also stated that the cuts did not cancel any already revealed first-party projects.

However, Bloomberg’s Jason Schreier reported that several unannounced Obsidian games were shelved during the restructuring. At the same time, a significant portion of the studio was reportedly redirected toward work on a new Fallout game.

Obsidian’s “DNA” argument: veterans remain in senior creative roles

Adler’s defense centers on continuity. He argued that despite the layoffs, most of Obsidian’s senior creative roles are still filled by veterans tied to the studio’s earlier successes, including Fallout: New Vegas, Pillars of Eternity, and The Outer Worlds, along with other acclaimed RPG work.

While he acknowledged that no studio remains unchanged after two decades, Adler insisted Obsidian’s creative “DNA” has not shifted in the way critics suggest. He dismissed speculation that the studio is “not who they used to be,” describing it as coming from people he characterized as spreading uninformed takes.

That stance also appears designed to counter the idea that Fallout: New Vegas is the sole benchmark for the franchise’s next entry. The broader context matters here: once the rumored project leaked online on July 8, fan reaction was not uniformly negative—many longtime players reportedly showed enthusiasm for an Obsidian-developed Fallout game.

Why the franchise rumor still has supporters

Even without confirmation on the rumored Fallout project’s outcome, Adler’s message aligns with Obsidian’s record since Fallout: New Vegas. The studio released multiple notable RPGs, including South Park: The Stick of Truth, Tyranny, Grounded, and Pentiment.

The source also notes that Obsidian’s 2025 titles—Avowed and The Outer Worlds 2—had “Mostly Positive” Steam user ratings as of mid-2026, alongside OpenCritic scores in the low 80s, with major nominations and some wins for minor honors. While those figures don’t guarantee success for a Fallout return, they provide context for why some players remain optimistic.

The rumor’s appeal is further supported by the presence of Fallout creator Tim Cain, who currently works at Obsidian. The source says Cain came out of retirement in late 2025 to contribute to an unannounced project, raising the possibility he could again be involved with the post-apocalyptic series.

Key points

• Brandon Adler criticized online claims about Obsidian’s ability to deliver a rumored new Fallout game.
• Microsoft’s Xbox restructuring reportedly shelved several unannounced Obsidian projects while redirecting work toward Fallout.
• Adler argued Obsidian’s senior creative leadership still includes veterans from past RPG successes, including New Vegas.
• Tim Cain’s current role at Obsidian adds another reason some fans believe a Fallout project could be in capable hands.

Expert View

This story signals two things at once: first, how quickly franchise rumors can turn into community conflict when staffing changes are involved; and second, that studio leadership is willing to directly challenge narratives when the conversation shifts from “what we know” to “what people assume.” For Obsidian and the Fallout brand, the competitive question isn’t just whether the next project can match Fallout: New Vegas—it’s whether the studio can keep its broader RPG identity intact while operating under the constraints of consolidation and reallocation across Microsoft’s teams.