Report: Obsidian losing around 1/4 of its staff in ‘Xbox reset’
Update (07/09/26): A Worker Adjustment and Retraining Notification (WARN notice) filed in California has revealed that at least 52 Obsidian workers are being laid off by Microsoft.
That total includes 43 staff members based in Obsidian’s office in California and nine remote workers also located in the U.S. state.
The filing was obtained by Game File and details the number of cuts being made by Microsoft in the region.
Original story: Obsidian Entertainment, creators of The Outer Worlds, Grounded, Pentiment, Avowed, and more has been hit with heavy layoffs in the so-called “Xbox reset” today. Kotaku reports around one quarter of the staff has been impacted, with 60-70 roles cut across all departments. Some cuts are immediate, and some staff have been told they will be part of the upcoming second wave.
“Looking through LinkedIn posts from impacted employees, it’s apparent that many of those impacted were senior talent, including some with over a decade of experience at the studio,” reads the report. “The art director on The Outer Worlds and the studio’s only recruiter were among those laid off.”
The report mentions that work on early access title Grounded 2 and previously announced DLC for The Outer Worlds 2 is still in production, but there’s a great deal of uncertainty outside of those projects. An all-staff meeting is reportedly planned for tomorrow.
The layoffs are part of a 3200-person layoff started today at Xbox, with 1600 today and 1600 further cuts expected within the next year. Xbox CEO Asha Sharma started the day with a note that the business is “not healthy,” that the cuts are necessary to course correct after big bets on “Game Pass, multi-platform, and a broader portfolio of content,” failed to pan out, and points to an industry “facing the most severe hardware crisis in its history,” without naming Microsoft’s own complicity in that particular debacle.
