Interplay was in serious financial trouble and the company was winding down. Various investors had been brought in to help right the ship, but their creative interference caused friction with the developers. Feargus Urquhart, Chris Parker, Darren Monahan, Chris Jones and Chris Avellone quit the company before it collapsed and established Obsidian Entertainment. Initially working out of Feargus’s attic, they scored a lucky early contract when LucasArts contracted them to make the sequel to BioWare’s Knights of the Old Republic, a Star Wars RPG. Despite a buggy release, Knights of the Old Republic II: The Sith Lords reviewed well and sold extremely well.
Obsidian then worked on a Dungeons and Dragons video game, Neverwinter Nights 2 (also a sequel to a BioWare game) before they teamed up with Sega for two projects: an original spy RPG, Alpha Protocol (2010), which was highly promising but released in a very buggy state, and an Aliens RPG that was cancelled.
Bethesda Studios then asked Obsidian to develop a follow-up to their hugely successful CRPG Fallout 3, noting that several of the creators of the Fallout series were still working at Obsidian. The result was Fallout: New Vegas (2010), an immensely successful and critically-acclaimed game. They followed this up with Dungeon Siege III (2011).
The company was then – ironically given today’s news – contracted by Microsoft to develop a launch RPG for the X-Box One, Stormlands. Obsidian spent a significant amount of money developing a demo for the game, which would be their first AAA, high-budget title. However, Microsoft grew frustrated that they couldn’t implement their Kinect control system into the game and cancelled it in 2012, which nearly drove Obsidian out of business, with half the studio’s manpower fired in one go.
They were saved by the decision to go to Kickstarter to crowdfund an old-skool CRPG. Project Eternity raised $4.1 million. The game was finally released in 2015 under the title Pillars of Eternity and was a critical and sales success.
In the meantime, the company also developed South Park: The Stick of Truth (2014), Pathfinder Adventures (2016), Tyranny (2016) and Pillars of Eternity II: Deadfire (2018). They are currently working on a new CRPG with Fallout creator Tim Cain in charge. The nature and current status of the game is unclear.
The sale of the company to Microsoft is on the one hand unsurprising: having existed hand-to-mouth for 15 years and nearly going bust once already, it’s clear the studio heads wanted greater financial security going forwards. However, it does seem to betray the ethos of the company as an independent studio, one of the few left in the business, and particularly seems to be at odds with its recent image as studio-of-the-people, funded by fans to make proper, old-skool CRPGs. Despite assurances, it is unlikely that Microsoft will allow them to keep making niche games for small audiences, especially after Pillars of Eternity II bombed in sales on release earlier this year.
More concerning is that Microsoft does not have a good history with its treatment of studios it buys, frequently mismanaging projects, giving conflicting information, lowering and raising budgets without warning and finally shuttering the studio in confusion (a fate most notably shared by Lionhead). Recently the company has vowed to do better and bought up a large number of studios, promising minimal interference. In this context, Obsidian makes a good fit for their model: a proven studio capable of working on both large-scale and small-scale games, and arguably have yet to prove themselves with the resources of making a proper, AAA, big budget RPG.
Unfortunately, this means it is now unlikely we will ever see a New Vegas II or Knights of the Old Republic III, but it does raise the intriguing idea of Obsidian developing a new Fable game or even a Halo RPG. Whether this happens or they’ll perhaps be allowed to make Pillars of Eternity III as a 3D extravaganza capable of going toe-to-toe with The Witcher 3 and the Dragon Age series remains to be seen.