Report: Obsidian in Talks to Dodge Xbox Closure — But Schreier Pushes Back

Conflicting reports are swirling around the fate of Obsidian Entertainment, the Xbox-owned studio behind The Outer Worlds and Avowed. One outlet says the developer is scrambling to stay open; another says that framing is wrong entirely. The confusion arrives as Microsoft's gaming division is said to be finalizing a wave of layoffs and studio decisions, with key details reportedly landing within days.

The Initial Report

Christopher Dring of The Game Business first reported that Obsidian was "deep in negotiation" with Xbox leadership in an effort to stave off a potential shutdown of the studio.

Schreier's Correction

Bloomberg's Jason Schreier subsequently disputed that characterization, stating that Obsidian is "not in negotiations to avoid shutting down" and that Xbox instead intends to keep the studio operating. Schreier added that a clearer picture of Xbox's plans should emerge on July 6. With the two reports in direct conflict, Obsidian's closure risk remains unconfirmed rather than settled either way.

Wider Xbox Restructuring Concerns

The Obsidian story is unfolding alongside broader reporting of significant layoffs and studio-closure decisions across Xbox Game Studios, also expected to come into focus around July 6. Other studios named as potentially at risk include Arkane Studios, Undead Labs, Compulsion Games, Double Fine, and Ninja Theory. Reporting suggests Xbox is concentrating resources on its flagship franchises, including The Elder Scrolls, Fallout, and Halo. Former developer George Broussard has claimed that teams not attached to Bethesda's largest properties are more exposed to cuts. Obsidian's two most recent releases, The Outer Worlds 2 and Avowed, are also reported to have fallen short of Xbox's internal sales projections. As it stands, no outlet has confirmed a final decision on Obsidian's status, and the record now includes both an initial report of active negotiations and a named correction disputing it. With Xbox's broader restructuring plans reportedly due to surface around July 6, the coming days should clarify whether Obsidian, or any of the other studios named in these reports, faces concrete changes.