Report: Obsidian Cancels Avowed 2, Josh Sawyer Returns to Lead New Fallout Game

What the Report Says

According to a Bloomberg report cited by VGC, Obsidian Entertainment has shelved a planned Avowed sequel to begin development on a new Fallout title. The report further states that studio design director Josh Sawyer is helming this new project after stepping away from another RPG described as "structurally and thematically" similar to Fallout. Sawyer, of course, directed Fallout: New Vegas in 2010, widely considered one of the best entries in the series.

The timing of the pivot is noteworthy. Obsidian released Avowed earlier this year, followed by The Outer Worlds 2 in October 2025. Both games were published under Xbox Game Studios. A sudden cancellation of a sequel to a brand new IP is unusual, especially so soon after the original's release. Yet the industry report claims the decision was made to redirect resources toward the Fallout franchise, which has seen a dramatic spike in interest following the highly successful Amazon Prime TV series adaptation in 2024.

No official statement has been issued by Obsidian, Xbox Game Studios, or Microsoft. The Obsidian news page shows no related announcements, and the company has not responded to requests for comment. This leaves the report in a "reportedly" category, credible but unconfirmed.

Why This Pivot Makes Sense

The Fallout franchise has never been more culturally relevant. The Amazon Prime TV series, which launched in April 2024, introduced the post-apocalyptic world to a massive new audience and rekindled passion among longtime fans. The series became a pop culture phenomenon, driving record player numbers for Fallout 4 and Fallout 76 months after its release. For Microsoft, which owns the Fallout IP through Bethesda, capitalizing on this momentum is a strategic no-brainer.

Obsidian's Fallout: New Vegas remains one of the most critically acclaimed entries in the series, and Josh Sawyer is a fan-favorite director who has long expressed interest in returning to the franchise. In previous interviews, Sawyer mentioned that he was working on a smaller-scale RPG project. A new Fallout game produced by Obsidian would have the potential to recapture the deep RPG mechanics and branching narratives that made New Vegas a cult classic.

Meanwhile, Avowed launched to solid but not spectacular reviews, with critics noting uneven pacing and narrative execution. Sales figures have not been disclosed, but the lack of immediate sequel buzz suggests that the game may not have met internal expectations. Microsoft likely sees Fallout as a safer bet with a guaranteed audience, especially given that Bethesda's own Fallout 5 is still years away. A well-timed Obsidian Fallout could fill the gap and keep the franchise in the spotlight.

If the report proves true, this would mark Obsidian's first Fallout game since 2010, a momentous return for the studio's dedicated fanbase. The cancellation of Avowed 2, however, raises questions about the future of the Pillars of Eternity universe in the action RPG space. Obsidian may continue its cRPG branch with Pillars titles, but the decision to abandon a promising new IP is a gamble.

Josh Sawyer's involvement suggests a project that honors the RPG depth of New Vegas while potentially scaling back scope to ensure a tighter narrative. He has indicated in the past that he prefers smaller, more focused experiences, and a new Fallout could be ideally suited to that vision. For Fallout fans, the report reignites hope for a spiritual successor to New Vegas. Whether it will be a direct sequel or a standalone entry in a different region of the wasteland remains unknown.

Treating the Report with Caution

Despite the tantalizing nature of the story, it is essential to treat this report with caution. The entire claim rests on a single Bloomberg report cited by VGC that has not been independently verified. Bloomberg has a strong track record on gaming scoops, but that does not guarantee accuracy. The lack of any official confirmation, or even a denial, from Obsidian or Microsoft is striking. Silence often occurs when a story is accurate but the company is not ready to announce, but it could also mean the report is premature or misinformed.

Readers should remember that unconfirmed reports, even from reputable sources, can sometimes be wrong. Game development plans change frequently, and what is being reported now may not reflect the final reality. Until Obsidian or Microsoft provides an official statement, this remains a compelling rumor. Journalists and fans alike should avoid treating it as established fact.

A New Chapter for Obsidian?

The reported cancellation of Avowed 2 and Obsidian's return to the Fallout universe with Josh Sawyer is the kind of headline that electrifies the RPG community. Yet until Obsidian or Microsoft makes an official announcement, it remains a compelling rumor fueled by credible reporting. What's undeniable is that the timing aligns perfectly with Fallout's renewed cultural relevance, and Sawyer's pedigree makes the prospect tantalizing. For now, we will watch the news pages and wait for confirmation, because if this report is true, it could redefine Obsidian's trajectory for years to come.