XBOX’s Fallout Revival Plan Gains Attention After Obsidian Takes Over a New Project

Microsoft’s decision to bring Obsidian and Josh Sawyer back to the Fallout universe is exciting fans, but recent studio changes and shutdowns have created new concerns.

XBOX by Tahmid Mahi on  Jul 10, 2026

XBOX has made some big moves lately, and they have sparked both excitement and frustration from players. Some decisions seem to show Microsoft is finally listening to what fans have been asking for, while others have raised questions about the future of key studios and franchises. 

One of the biggest announcements involves Nintendo, which revealed that Mario Kart Tour will officially be shutting down. The mobile racing game launched seven years ago and originally followed a free-to-play model with gacha-style mechanics. 

Microsoft XBOX Id Software

The shutdown has once again highlighted concerns around digital-only games and online services. 

Many players have spent lots of money on free-to-play games, sometimes hundreds or even thousands of dollars on in-game items. When Mario Kart Tour finishes, those purchases will be gone, and players are left to wonder just how long they can really expect digital content to be around. The situation has become another example of why some gamers continue to support physical media.

Meanwhile, PlayStation players are facing a similar situation with InFamous 2. Sony is reportedly preparing to shut down PlayStation 3 online services, which will affect the game's user-generated content features. While InFamous 2 is mainly known as a single-player experience, it also allowed players to create and share their own missions, levels, and 2D cutscenes. 

The shutdown will also affect trophy hunters because some InFamous 2 trophies require the online creation features. After the closure, earning the platinum trophy may no longer be possible unless Sony changes how those requirements work. Players still have some time to complete the remaining challenges before the shutdown arrives. 

While some players feel the demo should have arrived closer to launch, having one available now could still help introduce more people to the game. Nintendo's titles often continue selling strongly long after release, sometimes throughout an entire console generation, unlike many games that experience a major sales drop shortly after launch.

The biggest gaming discussion, however, is centered around XBOX and a possible new Fallout project from Obsidian. According to reports from Bloomberg, Obsidian has canceled a planned sequel to Avowed along with other unannounced projects. Under the new direction, studio design director Josh Sawyer is reportedly set to lead a new Fallout title.

This news has generated a lot of excitement because Obsidian is the studio behind Fallout: New Vegas, one of the most respected games in the franchise. Josh Sawyer directed and designed New Vegas, and many fans still consider it one of the best Fallout games ever made. 

Microsoft XBOX Logo

We still don’t know what kind of Fallout game Obsidian is making. 

It could be a sequel to New Vegas, but it could also take inspiration from the older isometric Fallout games. Josh Sawyer has said in the past that he’d like to return to that style, and the success of games like Baldur’s Gate 3 has shown that there’s still a strong audience for classic RPG experiences. 

Whatever Obsidian has planned, the fact that the studio is back in the Fallout universe after all this time has many fans excited. The announcement, however, also raised questions about why Microsoft had not acted sooner. Many fans expected XBOX to focus on games based on some of its biggest IPs, especially with Microsoft's acquisition of Bethesda and the Fallout franchise now firmly under its control.

The situation has also led to criticism of Microsoft's past approach under Phil Spencer. Others believe that XBOX had access to big franchises like Fallout, The Elder Scrolls, StarCraft, and Banjo-Kazooie but didn't move quickly enough to capitalize on them. Instead of StarCraft, the company approved several expensive projects that struggled to connect with audiences. 

However, some fans felt it moved away from the darker tone of the original Pillars games and became a more colorful and lighter experience. The idea that Obsidian was planning a sequel while fans were waiting for another Fallout game has frustrated some players who wanted XBOX to focus more on established franchises.

Supporters of the new direction believe XBOX leadership is now putting more attention toward projects that directly connect with its core audience. This is another move to an established franchise by Obsidian, this time to Fallout, which has a large fan base. Whether this approach will yield better results remains to be seen, but it is a noticeable shift in strategy.

But not every recent XBOX move has been met with the same level of support at the same time. Reports of layoffs at id Software have raised concerns among fans, partly because of the team’s work on id Tech. The engseen is lauded for its good performance across a range of platforms, including less powerful hardware. 

Microsoft XBOX Series S Console

There are fans who believe id Software could have helped the future of XBOX even more by lending a hand to big projects such as Halo or Perfect Dark. With the studio’s experience in first-person shooters and its reputation for technical excellence, many feel it could have brought valuable knowledge and support to those franchises.

But reports that id Tech itself has been completely killed off appear to be inaccurate.

The reported layoffs appear to have mainly affected the Dallas team at id Software. While that does not remove the concern surrounding the cuts, it means the situation is different from claims that id Tech is completely gone. The engine reportedly remains part of XBOX's plans for now, although future changes are always possible.

But there’s still uncertainty, and lots of people think id Software could be a valuable asset for XBOX down the road. The studio’s technology and experience could help major franchises like Halo or other first-person projects. Losing experienced developers is always disappointing, but the future role of id Software in first-person XBOX games needs to be clarified.

The idea of a new Fallout game from Obsidian has made long-time fans excited, but studio layoffs and digital shutdowns have served as a reminder of the challenges facing the gaming industry. These moves hint at Microsoft trying to rejig its approach to gaming, but the success of these changes in the long run will be down to how they are handled in the coming years.

Tahmid Mahi

Editor, NoobFeed

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