Obsidian is merging with Bethesda amid Xbox restructuring

Microsoft has confirmed that Obsidian is officially being merged with Bethesda as part of Xbox’s ongoing restructuring, following the studio’s recent return to the Fallout franchise.

In its Continuing the Reset update, Microsoft announced that Bethesda will “expand its remit to include Obsidian”, with the studio continuing work on its current projects, including Grounded and the newly announced Fallout title being developed in collaboration with Bethesda Game Studios.

The move formalises a partnership that has already been re‑established behind the scenes. Earlier this year, Obsidian was put back on Fallout, marking the first time the studio has touched the series since Fallout: New Vegas in 2010. Now, Obsidian will operate directly under Bethesda’s umbrella, aligning the two RPG teams more closely.

This consolidation is part of a wider reorganisation across Xbox Game Studios, aimed at reducing the number of business units and grouping teams that already work closely together. Alongside Obsidian’s move, Microsoft also announced role cuts and several studio divestitures, including Compulsion Games, Double Fine and Undead Labs transitioning to independence.

KitGuru Says: Obsidian and Bethesda working under the same banner is a historic moment for Fallout fans. Are you excited to see what this collaboration produces?

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