Obsidian Entertainment Overview
Pro stress-test →Obsidian Entertainment is an American video game developer based in Irvine, California and part of Xbox Game Studios. The studio specializes in developing story-driven, choice-based RPGs with a 20+ year history creating beloved licensed and original titles. As of July 2026, Obsidian Entertainment has been put in charge of making the next Fallout game—a significant strategic pivot following Microsoft's cancellation of a follow-up to Avowed, which underperformed.
Strategic Profile
Pro stress-test →Obsidian shifted from developing licensed titles to creating original games based on the studio's own intellectual property, including Pillars of Eternity and The Outer Worlds. Both Avowed and The Outer Worlds 2 released in 2025 and, despite mostly positive reviews, failed to meet Xbox Game Studios' sales goals. Obsidian is laying off around a quarter of its workforce, with layoff notices indicating the studio is specifically cutting 52 employees, 43 who work in-office in Irvine, California, and nine in-state remote employees.
Competitive Landscape
Pro stress-test →Under Microsoft, the company continued to work on triple-A role-playing games Avowed and The Outer Worlds 2, and started developing games that are smaller in scope, such as Pentiment, Grounded, and its sequel. Obsidian competes in the Western RPG market against other established studios developing choice-driven, narrative-heavy games. The studio's shift toward the Fallout franchise reflects Microsoft's consolidation strategy around proven IP franchises.
Industry Context
Obsidian Entertainment operates in Video game development (story-driven RPGs).
Key facts
Founded: 2003 · Headquarters: Irvine, US · Employees: ~200