Ethan Crossfield 
A fresh report is challenging the idea that Xbox outright canceled Avowed 2. While earlier coverage tied the sequel’s demise to Microsoft’s ongoing restructuring, Bloomberg journalist Jason Schreier now claims Obsidian still has a small internal team working on the RPG—meaning the project may be “canceled,” but it’s not necessarily over.
What happened
Avowed launched in 2025 as Obsidian Entertainment’s first attempt at a first-person RPG in the Pillars of Eternity universe. Not long after, reports surfaced that Xbox had scrapped plans for a follow-up as part of broader internal changes.
On July 8, 2026, Bloomberg reported that Xbox had canceled a follow-up to Obsidian’s Avowed, which was described as mostly well-received but not quite meeting the commercial expectations Xbox wanted. Those same reports said Xbox intended to redirect Obsidian’s efforts toward developing a new Fallout game under Josh Sawyer, and that the publisher was less interested in pursuing new or smaller IPs.
However, a later update complicates the picture. In a YouTube video uploaded on July 10, Jason Schreier—who also broke the original Avowed news—said Avowed 2 is still alive internally at Obsidian even after being labeled canceled. According to Schreier, a small group of developers continues to work on the sequel while waiting for other projects to be ready, potentially hoping Xbox will “uncancel” the game.
Schreier’s claim is that Avowed 2 is already fairly far along for a sequel to a game that released just last year. The idea is that bringing it closer to completion could make it easier for Xbox to justify finishing and releasing it without major additional cost. The report also lines up with remarks attributed to Obsidian co-founder and former chief creative officer Chris Avellone, who indicated the studio is trying to “re-pitch” the project because significant work has already been invested.
Why it matters
If Avowed 2 is truly continuing in a limited capacity, it would signal that Xbox’s restructuring may be more nuanced than a simple cancellation. For players, that matters because it changes the odds from “sequel is gone” to “sequel is delayed or in limbo,” where progress can still be preserved.
The broader context is that Xbox has not publicly commented on Avowed 2 or Obsidian’s next steps. The source notes that Xbox is reportedly shifting studios toward a franchise-first approach—implying Obsidian may be expected to focus on Fallout while other major Bethesda projects proceed. In that environment, a new IP like Avowed could be deprioritized, and fans could be left watching for signals that the sequel is either revived or permanently shelved.
Still, the central argument from Schreier is that sunk development effort can influence decision-making. If the internal team has already reached a stage where finishing is comparatively low-risk, Xbox might revisit the project once priorities and budgets settle.
What to watch next
With no official statements from Xbox or Obsidian, the next real confirmation will likely come indirectly—through studio announcements, staffing signals, or official project listings.
For now, the most important “tell” is whether the small Avowed 2 team remains active and whether Xbox’s restructuring priorities shift again. Until then, fans are left with cautious optimism: progress may be ongoing, but the sequel’s release is still dependent on internal approval.
If Xbox decides to keep Obsidian focused on established franchises, Avowed 2 could remain in limbo. If business priorities change—or if leadership revisits the economics of completing a nearly built sequel—Avowed 2 could re-emerge as a realistic release candidate.
- Treat Avowed 2 as “uncertain but not dead” until Xbox or Obsidian confirms otherwise.
- Watch for staffing and studio updates that indicate whether the sequel team is still active.
- Expect franchise-first strategy to remain a hurdle for new IP sequels during restructuring.
- If Avowed 2 is already far along, future decisions may hinge on how close it is to completion and cost to finish.
Expert View
This is the kind of rumor that can quietly change a community’s expectations: instead of a hard stop, it suggests a “pause with progress.” For players, that’s meaningful—work doesn’t vanish overnight when a project is already in motion. For Obsidian, it’s a gamble worth making: keep momentum alive while Xbox sorts out priorities. For the wider scene, it highlights how restructuring can reshape timelines without necessarily erasing the creative investments studios have already made.
