According to Bloomberg reporter Jason Schreier, Xbox studio Obsidian Entertainment has canceled the sequel to Avowed and is now shifting its focus to a new Fallout title. This information has not yet been officially confirmed by Microsoft.

What's Being Reported

The report states that Avowed 2 was progressing well and was expected to be announced sometime next year. However, the project was shelved because it did not align with the new strategy of Xbox CEO Asha Sharma. Instead, studio design director Josh Sawyer will be leading a new Fallout game set in the franchise universe. This marks Obsidian’s first return to the Fallout series since the critically acclaimed Fallout: New Vegas in 2010. Bloomberg’s sources note that the strategy remains "fluid" and plans could still change in the future.

Why Was Avowed 2 Canceled

According to an official WARN notice filed in California, Obsidian laid off 52 employees, about a quarter of its staff, as part of broader cuts across Xbox. The original Avowed did not meet sales expectations, and in Sharma’s new strategy, the Pillars of Eternity universe is no longer a priority brand. However, a small team will continue to work on Avowed 2 until the Fallout project is "ready," meaning there’s still a chance the sequel could be revived down the line.

Status of the New Fallout Game

Sawyer was previously leading another RPG that was structurally and thematically similar to Fallout but set outside its universe; that project has now been shelved in favor of the new Fallout game. Bethesda is expected to be involved to some extent, but the studio is still working on The Elder Scrolls VI, which is years away. Since Fallout 76 in 2018, there hasn’t been a new mainline Fallout game, so this news is a big deal for fans who have been waiting for a major return to the series.

Obsidian’s Other Projects

The studio will continue to support The Outer Worlds 2 and Grounded 2. Some sources claim that a Shadowrun game in development has also been canceled, but this has not been confirmed by Bloomberg’s report.

Context: Major Restructuring at Xbox

This move is part of a massive restructuring at Xbox announced this week, affecting around 3,200 employees in total. Sharma’s strategy is to focus Xbox’s resources on proven franchises like Elder Scrolls, Doom, Wolfenstein, and Fallout.

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Frequently Asked Questions

Is Avowed 2 completely canceled?

According to the report, no. A small team is still working on the project at low priority, but no announcement is expected soon.

Is the new Fallout game a sequel to Fallout: New Vegas?

That’s not clear yet. The report confirms Josh Sawyer is leading the project, but there are no details about the story or timeline.

Is this news officially confirmed?

No, the details are based on Jason Schreier’s sources at Bloomberg. Microsoft has not made an official statement yet.