Obsidian Entertainment, the RPG studio behind The Outer Worlds series and Avowed, is reportedly cutting a significant portion of its workforce, according to a Kotaku report published July 7, 2026, and aggregated by GamingBolt. Sources cited by Kotaku put the number at approximately 60 to 70 employees, or around a quarter of the studio's total staff — though as of this report, neither Obsidian nor parent company Xbox had issued any official confirmation. Kotaku's sources reportedly indicated a studio-wide meeting was scheduled for the same day the report went public, suggesting an internal announcement may have coincided with or followed the leak. Until Obsidian or Xbox comments directly, the scale and details of the cuts remain unconfirmed.
What's Being Reported
According to Kotaku's sourcing, the layoffs would touch a wide swath of Obsidian's staff, with affected roles reportedly including producers, designers, QA testers, writers, and programmers. That breadth suggests the cuts, if accurate, would not be confined to a single department or project team. One departure has been attached to a name: Daniel Alpert, who served as art director on The Outer Worlds, is reported to have left the studio. Kotaku's report also cites the departure of an unnamed studio recruiter. Neither Obsidian nor Alpert has publicly commented on the circumstances of the exit at the time of this report.
Which Projects Are Affected
Despite the reported cuts, work on two of Obsidian's active projects is said to be continuing: story DLC development for The Outer Worlds 2, and the ongoing development of Grounded 2. The status of Avowed is reportedly less clear, though the same report claims a sequel, Avowed 2, is already in the works — a notable detail given the uncertainty hanging over the original game's team.
Part of a Larger Xbox Pattern
The reported cuts at Obsidian would land within a broader wave of layoffs across Xbox's studio portfolio tied to Microsoft's fiscal year 2027 planning, per the report. Obsidian has weathered closure speculation before without being shut down, and studio head Feargus Urquhart has previously addressed the commercial performance of The Outer Worlds 2 and Avowed, acknowledging both fell short of financial expectations while stopping short of calling them "disasters." As with any unconfirmed report, the specifics — headcount, department breakdown, and what it ultimately means for Obsidian's slate — could shift once the studio or Xbox addresses it directly. 1vX will update this story if Obsidian or Microsoft issues an official statement.
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