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As Xbox continues its reset and lays off nearly 300 staff, the company announced that some of its subsidiaries have been shaken up as well. This includes Obsidian Entertainment, which will now operate under Bethesda Softworks.
On September 22, Xbox chief content officer and executive vice president Matt Booty posted on Xbox's website, outlining a new structure that sees the Bethesda business unit now include Obsidian.
"Bethesda will expand its remit to include Obsidian, which will continue its current projects, including Grounded, as well as the new Fallout project made in collaboration with Bethesda Game Studios," Booty wrote on Xbox Wire.
This language doesn't appear to suggest that Bethesda gobbled up Obsidian to take ownership over the studio or anything. Instead, it sounds a little closer to the working relationship Bethesda--or rather, the studio's parent company, ZeniMax Media--has with Doom maker id Software.
Since the news was made official, Bethesda president Jill Braff reportedly told employees (via Aftermath) that the "creative identity and strengths that make Obsidian distinct will remain at the core of their work," so it doesn't appear there will be a major shake-up in the development process.
Obsidian Entertainment--which developed copious RPGs from Neverwinter Nights 2 to Pillars of Eternity to Star Wars Knights of the Old Republic II: The Sith Lords to The Outer Worlds--lost 25% of its staff in July after Xbox's first major reset. This resulted in the Avowed sequel being killed and the acclaimed RPG studio shifting its focus to the Fallout franchise, with a new game in development. It's unclear if this project is Fallout 5 or some spin-off of the long-running series, but alongside whatever Obsidian Entertainment is working on, there are at least three Fallout pies in the oven now.
This isn't the only reshuffling happening at Xbox. Booty also announced that Activision will develop the next Halo, Hellblade developer Ninja Theory will likely close, and the two Forza studios have hit the fusion dance to become one. There's more to come, too, with more layoffs reportedly planned before June 2027.