As has been widely reported elsewhere, Microsoft have embarked on a massive restructuring of their video game business. Thousands of staff are to be laid off and around five studios are to be sold or spun off into independent businesses. Even the company's mores successful studios are being reconfigured, with Obsidian Entertainment re-tasked to help Microsoft focus on its most successful IP. To this end, according to highly reliable industry insider Jason Schreier, Microsoft have commissioned Obsidian to make a new game in the Fallout series.
Obsidian Entertainment were founded in 2003 but many of the key founders had previously worked for Black Isle Studios, formerly the internal development studio at Interplay. There, several staff had worked on Fallout (1997), Fallout 2 (1998) and the original Fallout 3: Van Buren, which was cancelled when Interplay collapsed around 2003. The IP was sold in full to Bethesda Game Studios, who proceeded to develop Fallout 3 (2008), Fallout 4 (2015) and the multiplayer-focused Fallout 76 (2018). However, Bethesda partnered with Obsidian to develop Fallout: New Vegas (2010), often (but not universally) cited as the best game in the series.
In the meantime, the Fallout franchise has acquired a substantially more massive fanbase, with the arrival of the Fallout TV series on Amazon Prime Video in 2024. The show has already produced two seasons and a third began shooting this week. There have also been new tabletop games. Aside from the ongoing development of Fallout 76 through expansions, Bethesda had admitted they were still years away from starting work on Fallout 5 due to their prior commitments to Starfield (2023) and its DLC, and the in-progress Elder Scrolls VI, which will be the sequel to the 60 million+ selling Skyrim (2011). Also according to Schreier, The Elder Scrolls VI is not expected to be released before 2028 at the earliest, likely punting off any Fallout 5 to the early-to-mid 2030s, by which time the TV show will almost certainly be over.
The only Fallout game on the horizon is Fallout 3 Remastered, which has not been formally confirmed but reliable leaks suggest it is in development as a co-production between Bethesda and Virtuos Studios, who previously handled The Elder Scrolls IV: Oblivion Remastered (2025).
Obsidian were acquired by Microsoft in 2018 and have since released The Outer Worlds (2019), Grounded (2022), Pentiment (2022), Avowed (2025) and The Outer Worlds 2 (2025). Grounded 2 is currently in Early Access.
Obsidian's regular release cadence has been extremely impressive by modern standards, especially compared to other Microsoft studios (in the same timeframe, Bethesda have only released Starfield). However, these games' critical and commercial success has been mixed; Pentiment was a critical darling but a low-key release that sold only moderately. Grounded is Obsidian's most successful game in its history, acquiring over 20 million players in a couple of years (shading even Fallout: New Vegas's success), but has largely gone unrecognised due to its perceived children's focus and not being in Obsidian's usual core RPG wheelhouse. Avowed did reasonably well (over 6 million players in its first month on sale) whilst Outer Worlds 2 was a major commercial disappointment, with both games reviewing only moderately. Grounded 2 has picked up some major plaudits in Early Access, but is largely being developed by an external partner studio.
As part of the strategic shift, work on Avowed 2 has been downgraded, with a small team to continue work whilst most shift to the Fallout game. An unannounced major new RPG project, claimed by ex-Obsidian founder Chris Avellone to be set in the Shadowrun universe, has been paused, again with the team expected to be redeployed to the Fallout game. Work on the DLC for The Outer Worlds 2 is expected to be completed shortly.
The new Fallout game will apparently be headed by Josh Sawyer, who was previously the director of Fallout: New Vegas. New Vegas writer John Gonzalez, as well as Fallout co-creators Tim Cain and Leonard Boyarsky, are all working at Obsidian and may work on this new project as well.
No information about the game's setting or title is known, and may still be in flux as apparently this strategic decision may have only been made this week. Microsoft are likely to want to call the game Fallout 5 to capitalise on interest in the series and the length of time since the last mainline release, but whether that's the case remains to be seen.
More on this when it appears.
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