The studio behind Avowed, The Outer Worlds, Pentiment, and Grounded has become the latest casualty of Microsoft’s sweeping cuts across Xbox Game Studios. Multiple Obsidian Entertainment developers confirmed on social media that they’d been let go, and the numbers are ugly: reporting from Kotaku suggests roughly 60 to 70 people — about 25% of the studio — were shown the door.
The cuts are part of a broader Xbox “reset” that CEO Asha Sharma says eliminated 1,600 jobs in a single day, with a running total of 3,200 positions expected to be gone by the end of fiscal year 2027. That’s not a trimming exercise. That’s a structural overhaul, and it’s leaving deep marks on studios that fans consider untouchable.
The reaction from those affected has been raw. Narrative designer Jay Turner — whose credits stretch from Avowed back to BioWare classics like Dragon Age: Origins and Mass Effect 2 — didn’t mince words on Bluesky.
“I and a good number of very talented game devs were laid off by Obsidian as part of the Microsoft sacrificial rituals this morning,” Turner wrote, before pivoting to a job hunt: he’s a Senior Writer with more than two decades of experience and is now looking for work.
Kate Dollarhyde, a narrative lead who has written for Avowed, Pentiment, The Outer Worlds, and Pillars of Eternity, said “many excellent developers” at the studio lost their jobs. One Obsidian animator described being among “dozens” of people cut, adding that the studio had been their dream job straight out of school and “an amazing place to work.”
What stings here is the timing. Only last week, rumors swirled that Obsidian was one of several studios negotiating with Microsoft to avoid outright closure. Bloomberg’s Jason Schreier debunked the shutdown fears — and technically he was right, the studio survives. But surviving with a quarter of your team gone is a hollow kind of reassurance.
Obsidian had, until now, looked like one of the more resilient corners of the Xbox umbrella. That illusion is over. The same round of cuts has hit heavyweights like Bethesda and ZeniMax Online, prompting Bethesda’s union to publicly blast Microsoft with a pointed question: “When will this cycle of cuts in pursuit of ever-greater profits end?”
It’s a fair thing to ask. For all the talk of resets and restructuring, the practical result is the same — enormously talented people who built games millions of players love are suddenly hunting for their next paycheck. If no studio under the Xbox banner is safe, the broader message to the industry is bleak. And the players who cheered Avowed and Pentiment into existence are left wondering what, exactly, is being reset — and at whose expense.
