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Xbox reportedly cancels Avowed sequel to make room for a new Fallout game from the New Vegas director

July 8, 2026
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Xbox’s recent restructuring may have claimed another project, but Fallout fans could be getting something far more exciting in return. According to Bloomberg, Microsoft-owned Obsidian Entertainment has cancelled its planned Avowed sequel and is instead shifting its focus to a brand-new Fallout game. The project will reportedly be led by Josh Sawyer, the director behind the critically acclaimed Fallout: New Vegas, making it one of the most exciting Fallout developments in years.

A familiar name returns to Fallout

Sawyer is no stranger to the wasteland. He directed Fallout: New Vegas, widely regarded by many fans as one of the best entries in the franchise. Bloomberg reports that he had previously been leading an original RPG with similar themes and structure to Fallout, but that project has now been replaced by an official Fallout title as part of Xbox’s broader strategy shift.

Obsidian Entertainment / Bethesda Softworks / XBOX

The report also says Bethesda Game Studios will collaborate with Obsidian on the new project. That’s notable because Bethesda has largely been occupied with other games since releasing Fallout 76 in 2018, leaving the main Fallout series without a brand-new entry for years. Meanwhile, Fallout 76 has continued to receive updates and has grown to more than 23 million players, while Amazon’s Fallout TV series is currently filming its third season.

Avowed takes the hit

The new Fallout reportedly comes at the expense of another RPG. Bloomberg says Obsidian has cancelled its planned sequel to Avowed, despite development progressing well and an announcement reportedly being planned within the next year. The sequel ultimately didn’t align with Xbox CEO Asha Sharma’s strategy of investing more heavily in Microsoft’s biggest franchises.

Avowed key art revealed during the January 18 2024 Developer_Direct
Obsidian Entertainment

While that’s disappointing news for Avowed fans, Fallout supporters have plenty to look forward to. If Bloomberg’s report proves accurate, it would mark the first time since New Vegas that Josh Sawyer has officially returned to the Fallout universe. Given the original game’s enduring popularity, that’s likely to be the biggest takeaway from Xbox’s latest shake-up.

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