Although Obsidian Entertainment is likely focusing on Fallout: New Vegas 2, the team reportedly hasn’t given up on developing new intellectual property (IP).

Last November, Chris Avellone, the highly regarded RPG game designer and former Obsidian Entertainment co-founder, reported that the California-based studio would be working on Avowed 2 while moving away from The Outer Worlds IP. However, this information was later contradicted as part of a major restructuring at Xbox led by new CEO Asha Sharma. Sharma ordered the studio to cancel the sequel while giving the green light to a new Fallout game. At least, that’s what Bloomberg editor Jason Schreier claimed. However, Avellone stated on Twitter that Avowed 2 hasn’t been completely canceled and that Obsidian staff still hope to resubmit it to Xbox in the future since a great deal of preparatory work has already gone into it. He also wrote that all other projects have been put on hold, including the new project John Gonzalez was working on, which was reportedly based on the Shadowrun IP.

Aside from other news, Obsidian employees appear to have been told all the company’s projects were “re-evaluated” today.

It seems Grounded is still going (mostly out-sourced in Eidos Montreal anyway, so no surprise), Outer Worlds 2 expansions still planned for now (1st one is…

– Chris Avellone (@ChrisAvellone) July 8, 2026

“Aside from this, Obsidian employees appear to have been told that all of the company’s projects have been “reevaluated.” It seems Grounded is still going (mostly outsourced to Eidos Montreal, so no surprise), and the Outer Worlds 2 expansions are still planned for now (the first one is in September). Despite reports, Avowed 2 is still being worked on in the hopes of being ‘repitched’ (whatever that means). As of today, they’re still working on Avowed 2, according to folks at Obsidian. They’re trying to “re-pitch” it when the dust settles, probably because so much work has already been put into it. All other projects at the studio, including the rumored Shadowrun game John Gonzalez was working on, have been put on pause. There was no mention of any Pillars of Eternity games. If Avowed 2 doesn’t get a buyer or approval, it may be some time (or never) before another Pillars game or PoE3,” Avellone wrote.

This can be traced back to a comment made by Obsidian CEO Feargus Urquhart in August 2024. He said that he would be very happy if the studio developed a Shadowrun game. This IP is criminally underrated and just waiting for RPG developers to seize the opportunity. At the same time, the potential for a new Fallout game among Obsidian’s current staff is hard to ignore. Josh Sawyer, the director of Fallout: New Vegas, is reportedly already working on it. Gonzalez, the lead writer on New Vegas, will likely join Sawyer’s team. Additionally, two veterans from the classic Fallout games, Leonard Boyarsky and Tim Cain, would be a huge help.

Given Xbox’s new strategy of investing only in the biggest franchises, it wouldn’t be surprising if the preparatory work for Avowed 2 were repurposed for a new Elder Scrolls game. After all, The Elder Scrolls VI is reportedly still far from release. As for Avellone, he joined Republic Games last year to work on a new dark fantasy RPG about which nothing has been revealed yet.

Source: WCCFTech