Obsidian Entertainment has reportedly cancelled Avowed 2 and will instead shift development resources to a new Fallout game, according to a Forbes report. The studio's director, Josh Sawyer—famous for leading Fallout: New Vegas—is said to be attached to the project, reigniting hopes for a spiritual successor to one of the most beloved entries in the franchise.
The news, published July 8, 2026, sent shockwaves through the gaming community. Obsidian, a subsidiary of Xbox Game Studios, had been working on Avowed 2 as a direct sequel to its 2025 fantasy RPG. That game launched to mixed critical reception and modest commercial performance, selling roughly 3 million copies in its first month against an internal target of 5 million. In contrast, Fallout: New Vegas, released in 2010, has sold over 12 million copies to date and maintains a towering reputation among role-playing game enthusiasts.
Why this matters now: Microsoft's Xbox division is under increasing pressure to deliver blockbuster exclusives. The cancellation of Avowed 2—a relatively new, riskier IP—in favor of a proven franchise aligns with a broader industry trend of publishers doubling down on established brands. The Obsidian Fallout game also positions the studio to fill a gap left by Bethesda Game Studios, which has moved on to The Elder Scrolls VI and Starfield updates.
The report cites unnamed sources familiar with internal planning. An official announcement is expected before the end of 2026, though no release window has been set. The project is in early pre-production, with a small core team already assembled. Josh Sawyer's involvement has not been publicly confirmed by Obsidian or Microsoft, but his track record with narrative-driven RPGs makes him a natural choice to helm a new Obsidian Fallout game.
The broader implications extend beyond one studio. Microsoft's strategy of leveraging its deep portfolio of acquired studios—including Bethesda, Obsidian, and inXile—to energize its first-party lineup is now center stage. The new Obsidian Fallout game could become a system seller for Xbox and PC, especially if it captures the freedom and reactivity that made New Vegas a cult classic. Meanwhile, the cancellation of Avowed 2 raises questions about Obsidian's creative autonomy and the pressure to deliver on Microsoft's investment.
What happens next: Xbox is expected to host a showcase in early 2027 where the new Fallout project could be officially unveiled. Until then, fans will parse every hint from Josh Sawyer's social media and Obsidian's job listings. The gaming industry will watch closely to see whether this bet on a beloved legacy IP pays off—or whether the shadow of New Vegas proves too long for even its original creators to escape.
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New ‘Fallout’ Game Reportedly Coming From Obsidian, ‘Avowed 2’ Cancelled
Obsidian has reportedly cancelled a sequel to Avowed, and will instead work on a new Fallout game under the direction of Fallout New Vegas’ Josh Sawyer.
Paul Tassi, Senior Contributor
Forbes
3 min read
6/10
Irvine
Key Takeaways
- Obsidian's Fallout: New Vegas sold over 12 million copies and is widely considered the best Fallout game among fans, with a 94% positive rating on Steam.
- Avowed (2025) sold approximately 3 million units in its first month, falling short of Microsoft's internal estimate of 5 million, contributing to the sequel's cancellation.
- Josh Sawyer, director of Fallout: New Vegas and Pentiment, is reportedly attached to lead the new Obsidian Fallout game, his first Fallout project since 2010.
- The new Fallout title is in early pre-production with a target release window of 2028–2029, according to sources cited by Forbes.
- This marks the third major project cancellation at Obsidian since its 2018 acquisition by Microsoft, following a Pillars of Eternity sequel and a Stormlands prototype.
- Microsoft has invested over $7.5 billion in game studios since 2020, with Obsidian's shift toward the Fallout IP underscoring a focus on high-margin, proven franchises.
Frequently Asked Questions
According to a Forbes report citing internal sources, Obsidian Entertainment has cancelled Avowed 2. The studio will redirect resources toward a new Fallout game instead.
Josh Sawyer, the acclaimed director of Fallout: New Vegas and Pentiment, is reportedly attached to lead the new Obsidian Fallout game. This has not been officially confirmed.
The project is in early pre-production with a likely release window of 2028–2029. No official date has been announced.
As an Xbox Game Studios title, it will launch on Xbox Series X/S, PC, and Game Pass. A PlayStation release is unlikely given Microsoft's exclusivity strategy.
Reports suggest Avowed's sales fell short of expectations, selling 3 million units in the first month against an internal target of 5 million. Microsoft is prioritizing proven IPs like Fallout.
No official details are known, but the involvement of Josh Sawyer has fueled speculation that it could be a spiritual successor set in the same West Coast region.
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Original source
www.forbes.com
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