Obsidian Entertainment laid off around 25% of its staff, cutting 60 to 70 jobs on July 6. This was part of the first wave of Xbox layoffs that included 1,600 job cuts across Xbox divisions worldwide [1, 2, 3].
The layoffs affected a broad range of roles, including artists, designers, writers, producers, programmers, QA testers, senior staff such as the studio’s art director, and even the studio’s only recruiter [1, 2, 3]. Some of those laid off had over a decade at Obsidian, with veterans reaching 20 years [1, 4, 2, 3].
Obsidian held an all-hands meeting on July 7 to address the situation with remaining employees and clarify next steps [1, 4, 2, 3]. Despite the cuts, the studio will continue work on Grounded 2 and downloadable content for The Outer Worlds 2, though the future of other projects is uncertain [1, 4, 2, 3].
Obsidian, acquired by Microsoft in 2018, had several recent releases including The Outer Worlds 1 and 2, Grounded 1 and 2, Avowed, and Pentiment [1, 4, 2, 3]. Some sources indicate Avowed and The Outer Worlds 2 sold below Microsoft’s expectations, and there are no current plans for a third Outer Worlds game [4].
Industry veteran Daniel Alpert, former Obsidian art director, said, "We are clearly at a turning point in the games industry. These past months have been difficult for so many talented people, and unfortunately, it seems the challenges aren't over yet." [3]
Writer and narrative designer Jay Turner described the layoffs as "Microsoft sacrificial rituals" [1].
Xbox plans to cut a total of 3,200 jobs by the end of its fiscal year, with 1,600 laid off in early July and another 1,600 expected in later waves [1, 4, 3]. The next rounds of layoffs are scheduled to complete by mid-2027.
The July 6 cuts mark a major downsizing at Obsidian and reflect broader staffing reductions ongoing at Xbox under Microsoft.
