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Home Entertainment

Obsidian Entertainment may also be hit by upcoming Xbox cuts

Story Center by Story Center
July 2, 2026
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Obsidian Entertainment may also be hit by upcoming Xbox cuts

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Xbox’s internal restructuring continues to escalate, and according to a new report, Obsidian Entertainment is now among the studios in negotiations with Microsoft to avoid closure. This follows earlier reports indicating that Compulsion Games, Ninja Theory, Double Fine and Undead Labs are all at risk as part of Xbox’s ongoing cost‑cutting initiative.

The latest update comes from The Game Business, which lists Obsidian Entertainment as one of the studios potentially facing closure. This is particularly surprising as Obsidian was not mentioned in any previous reports. On top of that, Obsidian has been the most active studio under Microsoft since being acquired. Obsidian launched The Outer Worlds just months after joining Microsoft, before going on to ship Grounded, Grounded 2, Avowed and The Outer Worlds 2.

None of Obsidian’s newer games have been GOTY contenders, but they have all been well received by fans and the releases have been timely. Obsidian is one of the few studios under Microsoft actually shipping games, while most of the others are taking half a decade to even announce new projects. If Xbox wants a quicker turn-around on its games, then Obsidian should be one of the few studios you do everything to keep.

One of the more reputable reporters in the gaming space, Jason Schreier, has since shared that they’ve heard that Obsidian is safe, casting doubt on The Game Business’ report.

KitGuru Says: Nothing is confirmed yet and Obsidian hasn’t been mentioned in any of the other reports about the upcoming cuts at Xbox. We will find out for sure later this month though, as Microsoft will begin to make public announcements ahead of its next earnings call. 

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‘ The preceding article may include information circulated by third parties ’

‘ Some details of this article were extracted from the following source www.kitguru.net ’

Tags: Microsoftnewsobsidian entertainmentXbox
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