The restructuring implemented by Microsoft has generated significant impacts on internal studios, and Obsidian Entertainment, developer of games such as The Outer Worlds, Avowed, Grounded, and Pentiment, suffered from a new round of layoffs, resulting in the loss of approximately 25% of its workforce.
As reported by Kotaku, the number of laid-off employees ranges between 60 and 70 people. The cuts covered professionals from various areas of the studio, including production, art, programming, design, writing, quality assurance (QA), and recruitment. Among those affected were experienced developers with over ten years of service at Obsidian, as well as the art director of The Outer Worlds and the company's sole recruiter.
These layoffs are part of the first phase of a larger restructuring announced by Microsoft, which foresees the elimination of thousands of positions over the next fiscal year. Most of the dismissals occurred on Monday (6th), although some employees have been notified that they will leave the company in subsequent waves in the coming months.
Sources consulted by Kotaku indicated that the remaining members of Obsidian are still awaiting guidelines on how the projects under development will be reorganized after this considerable reduction in personnel. Nevertheless, work on Grounded 2, which is in early access, and the expansion of The Outer Worlds 2 should proceed without interruption.
Plans for the studio's other titles remain uncertain, and it is expected that leadership will provide new information during a general meeting scheduled for Monday (7th). Microsoft, when contacted by Kotaku, did not offer comments on the details of the layoffs.
Founded in 2003 by former members of Black Isle Studios, Obsidian established itself as a prominent name in the Western RPG genre. Throughout its history, the studio has released notable works such as Star Wars: Knights of the Old Republic II, Neverwinter Nights 2, Alpha Protocol, Fallout: New Vegas, and Pillars of Eternity, in addition to more recent productions like The Outer Worlds, Pentiment, Grounded, and Avowed.
Since being acquired by Microsoft in 2018, Obsidian has become a strategic pillar of Xbox Game Studios, being responsible for multiple franchises and simultaneous projects. The recent layoffs reinforce the context of restructuring faced by the Xbox division, which has already affected several studios recently, as part of Microsoft's strategy to optimize costs and realign investments in game development.
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Xbox Game Pass may face a considerable transformation, as there are rumors that Microsoft has temporarily suspended the formalization of new contracts with third-party publishers and independent studios. This action is reportedly occurring while the company reviews the overall strategy of its subscription service.
The information, disclosed by insider eXtas1s, emerged during the First Playable event, focused on the game development market, held in Italy. According to this insider, several independent developers reported that ongoing negotiations to integrate their titles into Game Pass were abruptly halted.
The main aspects mentioned in this rumor include the cancellation of proposals to add new games to Game Pass during negotiations, the complete halt of new contracts with third-party studios, and the possibility that this decision comes from the new leadership of the Xbox division, which is promoting a strategic reorganization of the platform.
If the rumors are confirmed, Microsoft would be reassessing a fundamental pillar of Game Pass: the financial contribution to third-party games made available directly in the catalog, often at launch (day one). In recent years, the company has invested hundreds of millions of dollars to secure these agreements with independent studios and publishers, establishing the service as an industry highlight.
According to the rumor, the purpose of this review would be to reduce operational costs and redefine the investment policy applied to Game Pass.
The potential interruption of new contracts could have significant consequences for smaller developers. Many studios relied on these Game Pass agreements as a source of capital to develop their projects, receiving advances from Microsoft in exchange for including the games. Without this mechanism, small studios might be forced to seek other funding sources or rely exclusively on post-launch sales.
To date, Microsoft has not issued any official statement regarding any changes to the Xbox Game Pass strategy. For this reason, the information brought by eXtas1s should be considered mere rumors until the company confirms any changes to the service's operation. If the restructuring is formalized, it could usher in a new phase for Game Pass, which has consolidated itself as a key differentiator of the Xbox ecosystem in recent years.
