Microsoft Moves Obsidian Entertainment Under Bethesda Game Studios Leadership

Microsoft has absorbed Obsidian Entertainment into Bethesda Game Studios as part of a broader reorganization of Xbox Game Studios. Jill Braff, President of Bethesda and Casual Games, announced the change in reporting structure via a memo to employees, stating the move supports a franchise-led model focused on major intellectual properties like Fallout and The Elder Scrolls.

Braff asserted that Obsidian will maintain its distinct creative identity and that CEO Feargus Urquhart and his leadership team will continue to run the studio while reporting to her. While Bethesda Game Studios will continue to lead the Fallout franchise, the two studios are currently collaborating on a new project within that series.

This restructuring is part of a larger business reset led by Xbox CEO Asha Sharma to improve financial performance following the underperformance of Obsidian titles such as Avowed and The Outer Worlds 2. The reorganization coincides with significant instability at Xbox, which has seen nearly 2,000 staff cuts, including dozens at Obsidian and hundreds at Halo Studios. Additionally, Microsoft moved Rare and World's Edge to Activision as part of the shift.