Microsoft Has Big Plans for Fallout: Can Bethesda and Obsidian Deliver?

One of July’s biggest stories was yet another Xbox restructuring, which led to sweeping layoffs across Microsoft’s gaming studios: around 3,200 people have already lost their jobs or are expected to do so. There is obviously nothing positive about that. However, as part of the restructuring, Xbox’s new leadership under Asha Sharma reassessed its priorities and decided to invest more actively in its biggest franchises, including Fallout. For fans of the series, this is welcome news after a prolonged period of stagnation. Four games set in the famous post-apocalyptic universe are now in development at once. Let us take a closer look at these projects, who is working on them, and whether there is already reason to believe in a brighter future for Fallout.

Before discussing Fallout, it is important to establish the context in which Microsoft revised its strategy for the series. On July 6, Asha Sharma announced the largest restructuring in the division’s history. During the 2027 fiscal year, the company will cut approximately 20% of Xbox’s total workforce. Half of the affected employees were laid off immediately, while the rest will leave the company over the following months. The cuts affected Activision, Blizzard, King, Mojang, Xbox Game Studios, and Bethesda/ZeniMax divisions. The difficult decision was attributed to Xbox becoming overly focused on acquiring new studios, which ultimately spread its resources across too many different areas. Xbox’s operating margin was several times lower than that of comparable companies. The company’s bet on Game Pass and multiplatform releases also failed to meet expectations.

The restructuring was not limited to layoffs. Compulsion Games and Double Fine became independent studios while retaining the intellectual property rights to their games. It was also revealed that Ninja Theory and Undead Labs would be transferred to new owners, who are expected to finance their projects Senua and State of Decay 3. Meanwhile, the management of Arkane Lyon, the only remaining Arkane studio, began consultations required under French law regarding the studio’s possible future.

As mentioned above, many Bethesda Game Studios employees lost their jobs, while Obsidian lost approximately a quarter of its team. Those affected included producers, artists, designers, programmers, testers, and writers, including experienced specialists. Obsidian also canceled several projects to focus on Fallout.

Last week, Bethesda Game Studios published an open letter outlining its plans for the coming years. Despite online rumors that support for Starfield was being wound down, the game will continue to receive story content, improvements, and updates. Nevertheless, the current priority is The Elder Scrolls 6. Bethesda is also developing Creation Engine 3, a shared technology platform for the new TES and Fallout 5 that should make it easier to produce several RPGs simultaneously.

And yes, Fallout 5 has now officially been announced. However, the project is still in pre-production, and full development remains a long way off. The studio also confirmed remasters of Fallout 3 and Fallout: New Vegas without announcing release dates, as well as a new entry in the series from Obsidian. Support for Fallout 76 will continue as well: in 2027, the game will receive a major expansion called Raven Rock, which will serve as a prequel to Fallout 3.

Overall, Microsoft is clearly taking Fallout seriously. Prioritizing its most promising and successful franchises may be one of the smartest decisions made by Xbox’s new leadership. Despite the popularity of the Fallout TV series, neither the previous Xbox team nor Bethesda’s management managed to fully capitalize on its success. The Fallout 3 and New Vegas remasters were reportedly greenlit a long time ago, but for some reason no one had previously thought to put a new spin-off in Obsidian’s hands. Moreover, according to former company designer Chris Avellone, Obsidian wanted to work on another Fallout game, but Bethesda opposed the idea. If that is true, it seems reasonable to assume that Asha Sharma ultimately intervened and changed the company’s direction. She commented on Bethesda’s announcement as follows:

The developer has not officially been named, although the most obvious possibility is Virtuos, which released The Elder Scrolls 4: Oblivion Remastered last year.

Information previously circulated online suggesting that the updated versions of Fallout 3 and New Vegas were being developed “in the style of Oblivion Remastered.” This would mean hybrid remasters with updated graphics rendered in Unreal Engine 5, while the original engine and scripts remain underneath.

Of all the upcoming Fallout projects, the remasters are probably the safest bet. These are games that have already stood the test of time and regularly appear on lists of the best RPGs and best post-apocalyptic games. Even without any gameplay changes, they will still find an audience. Nevertheless, we can hope that certain mechanics will be reworked, as they were in Oblivion Remastered. Fallout 3 and New Vegas would only benefit from more modern gunplay or the power armor system from Fallout 4, where the armor is no longer merely a piece of clothing but effectively a miniature piloted mech.

It is currently unknown when the new versions will be released. Fans speculate that they could arrive next fall to coincide with the Fallout franchise’s 30th anniversary. The two remasters will most likely be released some time apart, with Fallout 3 arriving first.

This is the most intriguing project in the entire Fallout universe. The remasters had already been revealed through leaks, while everyone expected Fallout 5 to follow TES 6 sooner or later. Confirmation that Obsidian is developing another Fallout game was far less predictable. Microsoft had previously shown no clear interest in the idea, despite years of demand from the community.

Although we currently know nothing concrete about the game, it is already surrounded by some rather interesting rumors. Before the restructuring, Fallout: New Vegas director Josh Sawyer had been working on an RPG codenamed Michigan, which journalist Jason Schreier described in a Bloomberg article as a project structurally and thematically reminiscent of Fallout. According to Chris Avellone, Michigan was originally conceived as a Fallout game, but Bethesda refused to give it the green light. The designer claims that he learned this from his own sources. Michigan is now being canceled, while Sawyer is being transferred to the Fallout project, so it is possible that some of the previous work will form the foundation of the new title. It is an unusual situation. Moreover, according to Jez Corden, Xbox executives even discussed whether Michigan should be built on Unreal Engine or Creation Engine, which shows just how closely the project resembled Fallout.

It is no secret that after F:NV, whose strengths we previously explored in our Fallout: New Vegas anniversary feature, Obsidian never managed to release another project of the same caliber. Avowed, The Outer Worlds, and its sequel are all solid RPGs, but none of them realized the studio’s potential to the same extent as its most famous masterpiece. There are many possible reasons, but one may be that the lead creators behind Fallout: New Vegas never reunited to work on another game. Josh Sawyer moved on to the Pillars of Eternity series and later the experimental Pentiment, Chris Avellone became a freelance writer and designer, while John Gonzalez left to work on Horizon Zero Dawn. Now, according to Bloomberg, Sawyer will once again lead development of a Fallout game, while Gonzalez has returned to Obsidian. That alone is reason for cautious optimism. Add the fact that Fallout veterans Tim Cain and Leonard Boyarsky also work at the studio, and the result could be a dream game for fans — particularly with proper support from Microsoft.

Naturally, there are still concerns that “Obsidian is not what it used to be,” especially after the recent wave of layoffs. Even so, it is difficult not to feel at least some optimism and look forward to a new spiritual successor to Fallout: New Vegas.

The situation with Fallout 5 from Bethesda Game Studios is almost the exact opposite: it is difficult not to approach the project with a certain degree of skepticism. Nothing is currently known about it, but it is only natural to judge the future game by the studio’s most recent releases: Fallout 4, Fallout 76, and Starfield. None of them are outright bad, but each was disappointing in its own way, while many of their elements now feel outdated compared with the best modern open-world games, whether The Legend of Zelda: Breath of the Wild, Red Dead Redemption 2, or Cyberpunk 2077. Over the past 10 years, Bethesda has largely remained stuck in place, almost refusing to learn from its competitors and continuing to rely on the formula established by Fallout 3 and The Elder Scrolls 5: Skyrim, which is showing its age more clearly with every passing year.

To be fair, the lukewarm response to Starfield could become a catalyst for change. It is entirely possible that Todd Howard and his team have taken the criticism seriously and will finally make substantial improvements. We may even find out whether that is true before Fallout 5 arrives, using TES 6 as an early indicator.

Creation Engine 3 also deserves separate attention. Bethesda similarly promised a significantly upgraded engine for Starfield, yet the technology ultimately became one of the main reasons the game felt like a visitor from the past. The absurd number of loading screens is enough to illustrate the problem. Hopefully, this time the studio is preparing a genuinely substantial overhaul of Creation Engine.

The announcement of four Fallout games at once slightly softens the unpleasant aftertaste left by the news of the Xbox layoffs. That was almost certainly part of the intention. The Fallout project from Obsidian is particularly exciting, as fans of the series have been hoping for it for years. Nevertheless, Xbox’s new leadership and its studios still have to prove that they can turn this vision into reality, especially after such extensive layoffs.

It is also important to remember that Fallout 5 and Obsidian’s Fallout game are still many years away, as modern AAA releases take a long time to develop. There is therefore little reason to worry that Microsoft is turning the franchise into an assembly line that will soon leave everyone exhausted with Fallout. At this point, it would be enough to see even one new installment released — especially now, when gaming divisions are being cut down left and right.

Tell us in the comments which of the four projects gives you the most hope and which causes the most concern.