Microsoft’s Xbox to shift Obsidian studio to new ‘Fallout’ video game

July 10, 2026 - 01:58

Microsoft is steering its internal game development in a new direction, reassigning Obsidian Entertainment to work on a fresh installment in the Fallout franchise. The move marks a significant shift for the studio, best known for original role-playing games like The Outer Worlds and Pentiment. Obsidian will now join the ranks of teams tasked with expanding the post-apocalyptic universe originally created by Interplay and later popularized by Bethesda.

The decision comes as Microsoft continues to consolidate its first-party development resources following the acquisition of Bethesda's parent company, ZeniMax Media. While Bethesda Game Studios has traditionally handled mainline Fallout titles, the franchise's recent resurgence-fueled by the Amazon Prime TV series and updates to Fallout 76-has created demand for more content. By tapping Obsidian, Microsoft aims to leverage the studio's deep narrative expertise and its history with the series, as several Obsidian veterans worked on the classic Fallout: New Vegas.

Details on the new project remain scarce, but sources indicate it is still in early pre-production. The shift likely means delays for other Obsidian projects, though the studio has not announced any cancellations. For fans, the news raises hopes that the next Fallout game will capture the branching storytelling and player choice that defined New Vegas, while benefiting from modern technology and a larger budget.