Obsidian's Future Secured as Xbox Denies Shutdown Rumors

WHO:

Windows Central - Obsidian Entertainment, Xbox, Jason Schreier

Eurogamer.net - Microsoft, Obsidian Entertainment, Christopher Dring, Ash Sharma

WHAT:

Windows Central - Jason Schreier stated on BlueSky, "Despite a report this morning, I can confirm that Obsidian is not in negotiations to avoid shutting down."

Eurogamer.net - Christopher Dring noted that there is "a real sense amongst some teams that they're being punished for the poor performance of Call of Duty."

Eurogamer.net - Dring asserted that the performance of "Avowed and The Outer Worlds 2 could 'performed five times the numbers that they did' and still 'wouldn't have offset the drop on Call of Duty.'"

Windows Central - Rumors suggested that Obsidian Entertainment was facing closure, which were denied by Jason Schreier.

Eurogamer.net - A report from The Game Business claimed that Obsidian was negotiating with Microsoft to avoid closure as part of a reassessment of its business.

Eurogamer.net - The layoffs and cuts at Microsoft could potentially affect at least 1,000 jobs.

WHERE:

Eurogamer.net - The events are taking place within Microsoft and its Xbox division.

WHEN:

Eurogamer.net - The "big reset" plan by CEO Ash Sharma is ongoing, with implications expected to unfold in the near future.

WHY:

Eurogamer.net - The reassessment and potential layoffs are part of a strategy to turn the Xbox division into a healthy business.

HOW:

Eurogamer.net - A development expert commented, "If they think they can take that budget, stick it on Halo, and suddenly turn it into a 95 Metacritic smash hit, they're delusional."

Eurogamer.net - The internal chaos at Microsoft is leading to conflicting reports about the status of various studios, including Obsidian.

(UPDATED July 2, 2026 21:23 UTC)

In a recent update, Jason Schreier confirmed on BlueSky that Obsidian is not in negotiations to avoid shutting down, despite earlier reports suggesting otherwise. Meanwhile, Christopher Dring from Eurogamer expressed concerns that some teams feel they are being unfairly penalized for the disappointing performance of Call of Duty, noting that even if titles like Avowed and The Outer Worlds 2 had performed significantly better, it still wouldn't have compensated for that drop. A development expert weighed in, stating that the belief that reallocating the budget to Halo could magically transform it into a top-rated hit is simply delusional.

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(UPDATED July 2, 2026 19:31 UTC)

Obsidian Entertainment is reportedly in negotiations with Microsoft to avoid closure, amid rumors that were denied by journalist Jason Schreier. The ongoing "big reset" plan led by CEO Ash Sharma is expected to have significant implications for the Xbox division, which is currently facing potential layoffs affecting at least 1,000 jobs. This internal turmoil at Microsoft has resulted in conflicting reports regarding the status of various studios, including Obsidian.