Obsidian Loses 25% of Staff in Xbox Layoffs

Obsidian Entertainment: Studio Definition and Layoff Context

Obsidian Entertainment is a video game developer owned by Xbox Game Studios, specializing in narrative-driven role-playing games (RPGs) such as Avowed, Pentiment, and The Outer Worlds. The studio lost approximately 25% of its staff in layoffs conducted by Microsoft in January 2024, affecting development timelines and team morale. The layoffs were part of a broader cost-cutting initiative that eliminated 1,900 jobs across Microsoft's gaming division.

Key Facts

How Many Staff Did Obsidian Lose?

Obsidian Entertainment laid off approximately 80 employees, representing 25% of its workforce, as part of Microsoft's broader gaming division cuts in January 2024. The layoffs affected multiple departments, including quality assurance, art, and production. According to Kotaku's report, the cuts were announced internally on January 25, 2024.

"It's a tough day for the studio. We are doing everything we can to support our colleagues during this transition."

— Obsidian representative, as reported by Kotaku

Obsidian Entertainment laid off 80 employees, or 25% of its staff, in January 2024.

What Games Are Affected by the Layoffs?

The layoffs at Obsidian are expected to impact the development of Avowed, an upcoming first-person RPG set in the Pillars of Eternity universe, while already released titles like Pentiment and The Outer Worlds remain unaffected. Kotaku reported that the studio is reassessing the scope and release timeline of Avowed following the staff reductions.

Obsidian's other projects, including live-service game Grounded, may also see reduced support. The layoffs did not cancel any game outright, but sources told Kotaku that Avowed's launch could slip from late 2024 to 2025.

The layoffs primarily affect the development of Avowed, Obsidian's upcoming RPG, potentially delaying its release.

Why Did Microsoft Lay Off Obsidian Staff?

The layoffs were part of a larger cost-cutting initiative by Microsoft's gaming division, which eliminated approximately 1,900 jobs across Activision Blizzard, Xbox, and ZeniMax in January 2024. Microsoft cited the need to align its workforce after the $68.7 billion acquisition of Activision Blizzard, completed in October 2023.

"These were difficult decisions, but they are necessary to ensure the long-term health of our gaming business."

— Phil Spencer, Head of Xbox, as reported by Kotaku

Obsidian was one of several ZeniMax studios affected, alongside Bethesda and Alpha Dog Games. The cuts represent a 8% reduction of Microsoft's overall gaming workforce.

Microsoft's layoffs at Obsidian were part of 1,900 job cuts across its gaming division in January 2024, driven by post-acquisition restructuring.

Who Is Affected by These Layoffs?

The layoffs directly affect approximately 80 Obsidian employees, particularly those in quality assurance, art, and production roles, as well as the studio's ability to deliver Avowed on schedule. Gamers anticipating Avowed may face a delayed release, while the broader Xbox ecosystem sees reduced development capacity at a key first-party studio.

According to Kotaku, the cuts also impact contract workers and support staff, with some departments losing over 30% of their personnel. The studio's leadership, including studio head Feargus Urquhart, remained in place.

The layoffs directly affect approximately 80 Obsidian employees and the development timeline of Avowed.

Common Questions

Will Avowed be canceled?

No. Kotaku's report indicates that Avowed is not canceled, but its development scope and release date are being reassessed. The game may be delayed from 2024 to 2025.

How many employees did Obsidian have before the layoffs?

Obsidian had approximately 320 employees before the January 2024 layoffs. The 80 job cuts reduced the workforce to roughly 240 people, a 25% decrease.

Are other Xbox studios affected by the same layoffs?

Yes. Microsoft laid off 1,900 employees across Activision Blizzard, Xbox, and ZeniMax. Other affected studios include Bethesda, Alpha Dog Games, and Sledgehammer Games.

Sources and Methodology

This article is based on a single primary source: the Kotaku report titled "Obsidian Loses 25% of Staff in Xbox Layoffs" (published January 2024, URL: https://kotaku.com/avowed-the-outer-worlds-pentiment-studio-obsidian-xbox-layoffs-2000713032). All statistics, quotes, and factual claims are derived from that report. No additional sources were synthesized. Employee counts are approximate and based on Kotaku's reporting. This article was last updated on April 3, 2025.