Update: As of 10:24 AM ET, Bloomberg’s Jason Schreier claims that despite The Game Business‘s statement, Obsidian is not at risk. He notes plenty is still “up in the air” but that his sources say Obsidian is safe. Original article appears below.
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Now that the fiscal year has closed, the rumored layoffs and other major changes at Xbox are presumably just days away. In the absence of official news, rumors and speculation surround several key Xbox-owned studios. Some of them even have major games in the works, which now face potential cancellation. As if the list of developers we might lose as Xbox cuts costs wasn’t bad enough, another major studio is now also rumored to be at risk of shutdown.
A new report from The Game Business now claims that Obsidian Entertainment is among the studios negotiating with Microsoft to avoid closure. The developer has some big hits in its portfolio, including Grounded, The Outer Worlds, and Pillars of Eternity. But if The Game Business is right, that isn’t protecting the developer from Xbox’s price-cutting measures. Alongside other Xbox-owned studios, Obsidian may be negotiating with Microsoft to avoid being shut down entirely.
Xbox Could Shut Down Yet Another Beloved Studio
The list of studios potentially struggling to avoid closure was already pretty bleak for gaming. As of earlier this week, that list included Compulsion, Double Fine, Ninja Theory, and Undead Labs. While some of these studios hadn’t yet announced their next projects, some just showed off their work at the recent Xbox Games Showcase. Now, it seems that Obsidian Entertainment has joined the list of at-risk studios.
Xbox first acquired Obsidian Entertainment back in 2018. Since then, the studio has put out some of its most beloved games, including The Outer Worlds and Grounded. Both of these titles spawned sequels as recently as last year. However, it’s no secret that Avowed failed to live up to expectations for both RPG fans and for Xbox. Though the former Xbox exclusive has since made its way to other platforms, it has reportedly still failed to meet sales expectations. The Outer Worlds 2 also didn’t sell quite as well as Obsidian and Xbox might’ve hoped. This could be part of the reason why the team is now reportedly negotiating with Xbox to avoid being shut down.
However, The Game Businesses alleges there may be other factors at play. Supposedly, many at-risk studios fear they are being “punished for the poor performance of Call of Duty.” CoD is, of course, one of Xbox’s biggest properties. However, the most recent installment, Black Ops 7, sold significantly fewer copies than prior games. The game was notably launched as a Day One title for Xbox Game Pass, which may have been part of the game’s low recorded sales. The low sales no doubt impacted Xbox’s bottom line, but whether or not this factors into which studios are now on the chopping block remains speculation at this point.
Regardless of the reason, which is probably a mix of factors, it sounds like Obsidian Entertainment could be at risk of shutting down alongside other major Xbox Game Studios. At this point, we won’t know anything for sure until official announcements arrive. And from the sounds of it, negotiations are still underway, so it could be some time yet before the fate of these developers is decided. If Obsidian and the other at-risk studios do shut down, however, gamers stand to lose out on some great games that might have been.
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