Xbox Restructuring: Obsidian Not at Risk of Closure

The exact extent of the revolution underway at Xbox is not yet clear. Starting next week, Microsoft's gaming division will be hit by a wave of layoffs that could exceed a thousand units, and the existence of several studios will be called into question: rumors have indicated Ninja Theory, Double Fine, and Compulsion Games, to which Undead Labs and then also Arkane were added.

Obsidian Entertainment will continue to exist

Some rumors suggested that Obsidian Entertainment was also close to closure and was negotiating its survival with Microsoft. Fortunately, a denial came from journalist Jason Schreier, who received confirmation from people familiar with the situation that Obsidian will continue to exist. However, the studio may experience layoffs, with more information expected on Monday.

However, the rumors about Obsidian's demise would not have been entirely unfounded: according to Jeff Grubb, the hypothesis of a closure was indeed discussed by Microsoft at some point. We merely remind you that Obsidian is a historic developer in the RPG scene, capable of releasing three games in 2025 (Awoved, The Outer Worlds 2, and Grounded 2), and we leave any further considerations on the matter to you.

Despite a report this morning, I can confirm that 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.

— Jason Schreier (@jasonschreier.bsky.social) 16:24 · Jul 2, 2026