A profile of game studio Obsidian, which Microsoft acquired in 2018, as it seeks to shorten development times and cut costs after releasing three titles in 2025
The effort also lands after Xbox closed Bethesda studios and consolidated teams around higher-impact work, making production efficiency a material concern across Microsoft’s game organization.
First-order effects
Obsidian is reorienting its development approach toward shorter production cycles and smaller budgets after shipping three titles in 2025.
Microsoft gains a test case for whether an acquired studio can sustain a steadier release cadence without relying on larger, longer-running projects.
Second-order effects
Other Xbox studios may face stronger pressure to justify project scope, staffing, and timelines as Microsoft compares their output with Obsidian’s leaner model.
A lower-cost, faster pipeline could give Xbox more flexibility in how it supplies its broader service and content portfolio, rather than concentrating returns on a small number of major releases.
Third-order effects
If the approach proves repeatable, Microsoft’s studio network may increasingly be managed as a portfolio of teams optimized for different budget and release-cadence profiles, not simply for prestige-scale projects.
The broader signal is that consolidation can shift game development’s competitive measure from owning more studios to operating them with more predictable cost and delivery discipline.
The trend: Large game publishers are moving from acquisition-led content expansion toward tighter portfolio management, with development speed and cost control becoming central operating metrics.
Obsidian says that Avowed and The Outer Worlds 2 both underperformed sales expectations, with no more plans for future Outer Worlds games (though content for OW2 is coming). — Grounded 2, however, was a big hit for the studio. — (Read more at Bloomberg) [image]
Obsidian shipped three games last year: Avowed, Grounded 2, and Outer Worlds 2. Grounded 2 was a hit, but the two RPGs were not, leading to some self-reflection. How to make games in 3-4 years rather than 6-7? This story may be a case study for the entire industry www.bloomber…
Jason Schreier Interview with Obsidian: — 2 from 3 games (Outer Worlds 2 and Avowed) did not meet Xbox sales expectations. — Josh Sawyer “It's not good to release three games in the same year. It's the result of things going wrong.” — [1/2] — www.bloomberg.com/news/article…
NEW: I took a trip down to Obsidian Entertainment to talk about their stunning 2025, in which they somehow shipped three games. They were remarkably candid about their successes, their failures, and their plans for navigating the future. — For Businessweek Magazine: www.bloomb…