Rumors claim Xbox wants to close Obsidian, but Jason Schreier says otherwise

As the list of alleged Xbox studio cuts keeps on growing, Fallout New Vegas developer Obsidian is potentially on the chopping block.

It's been a weird year for Xbox. While new CEO Asha Sharma's commitment to returning to a better of era of Xbox has tickled many, the company has been plagued with concern of late, as myriad reports allege that it's trying to sell off or shutter some of its most beloved studios. Compulsion Games, Arkane, and Double Fine have all been caught in the crossfire, with Ninja Theory and Undead Labs potentially getting hit with cuts despite new trailers for Senua and State of Decay 3. The most recent name to be added to the list, however, is Obsidian. Yes, the developer of Fallout: New Vegas.

According to a new report from The Game Business, Obsidian may also fall victim to Xbox's new cuts. "Studios such as Compulsion, Ninja Theory, Double Fine, Obsidian, Undead Labs, and others are deep in negotiation with Microsoft to avoid closure," Chris Dring reports. Obsidian released three titles last year: Avowed, Grounded 2, and The Outer Worlds 2, all of which debuted to critically positive, if not somewhat muted response.

Dring claims that frustrations are running high at Xbox, which is allegedly fighting to return to profitability. He writes that Sharma has brought a "start-up mentality" to the company, prioritizing speed over methodical development. "Certain studio heads feel Sharma is listening too much to the consultants, and not enough to the people building the games," he writes.

Some studios also allege that they're being punished for the poor performance of Call of Duty: Black Ops 7, which was lambasted for its poor campaign, Endgame, and use of AI generated art, even if Jamie found its multiplayer segment genuinely fun.

"Even if Obsidian had delivered an incredible year, even if The Outer Worlds 2 and Avowed had performed five times the numbers that they did, it wouldn't have offset the drop on Call of Duty," Dring writes. "A game like that, and Candy Crush, and Minecraft, and Warcraft, make a lot of Xbox's output seem almost insignificant."

This is where things get a little more complex, however. Bloomberg's Jason Schreier has since taken to Bluesky, claiming that he "can confirm Obsidian is not in negotiations to avoid shutting down. Plenty of details are still up in the air surrounding the layoffs (picture will be clear on Monday) but Xbox is keeping Obsidian, according to people familiar with the situation."

It certainly feels like it'd be a colossal mistake: a Fallout: New Vegas remaster or remake would send the gaming sphere into meltdown - especially in the wake of Amazon's Fallout TV show's success. As he says, we'll have to wait and see on Monday, but if Obsidian does go, I'll have to pick my jaw up off of the floor.

Equally, if Xbox chose to sell Obsidian, I'm sure it'd manage to find a buyer somewhere. It's a stellar studio with an equally-stellar developer roster. We'll have to wait and see what the coming weeks bring, but between Compulsion, and Arkane, it looks like some of gaming's greatest may bite the dust.