Obsidian Stays with Xbox But Not Spared from the 1,600 Layoffs
Obsidian Entertainment remains with Xbox Game Studios but loses roughly 25% of its workforce in a massive 1,600-person Microsoft restructuring.
Key Takeaways
- Double Executive Departure: Xbox Game Studios Head Craig Duncan and Chief of Staff Louise O’Connor are both stepping down from their roles this week.
- Immediate Leadership Shift: No direct replacement for Duncan has been named; all first-party Xbox studios will now report directly to Chief Content Officer Matt Booty.
- Deep History with Rare: Both departing executives are long-time Xbox veterans who originally rose through the ranks at UK-based developer Rare.
While Obsidian Entertainment remains part of Xbox Game Studios and continues work on its upcoming projects, the studio was not untouched by the cuts. Several longtime developers and newer team members have already confirmed they were among those laid off as the first wave of exits began yesterday.
Obsidian Stays with Xbox with a Heavy Toll
However expected it was and heavily rumored it was the past couple of weeks, learning Xbox’s scale of reset was terrible news to wake up to. The massive restructuring affects 3,200 people overall and involves the divestment of 4 studios. Most would say at least the studios did not close entirely and all previously announced titles will move forward, but the significant number of people who lost and will lose their jobs is a heavy feeling that is hard to shake off.
The exit process started yesterday alongside the official announcement. While fans of Obsidian’s titles were relieved that the studio is staying with Xbox Game Studios, it was not spared from layoffs. In fact, the team was already affected in the first round of cuts yesterday.
Multiple employees have shared on different social media platforms of their unfortunate fate with the studio including veteran writer Jay Turner who is credited in Avowed. His tenure in the industry goes all the way back to classics like Jade Empire, Dragon Age Origins, and Mass Effect 2. He shared that he and a good number of very talented game devs were laid off by Obsidian as part of the “Microsoft sacrificial rituals” yesterday morning, adding that he is looking for a new senior writing or narrative design role. He has apparently applied to CD Projekt Red.
Another industry veteran who has been with the company for 21 years, artist Daniel Alpert, was also part of the layoff. Alpert is most recently credited for The Outer Worlds 2 and has worked on titles like Neverwinter Nights 2 and Alpha Protocol. According to PC Gamer , the cuts also affected area designer Tyler McCombs, communications producer Geoffrey Fogle, Pentiment artist Soojin Paek, Avowed narrative designers A.K. Fedeau and Katie Tenney, Avowed area designer Bre Seale, and engineer Wenzheng Huang. Huang, unlike the others who have had a much longer stay with the studio, had only been with the company since May.
Kotaku reports that this first round of layoffs accounts for roughly 25 percent of Obsidian’s workforce, estimated to be around 60 to 70 employees. The studio is also expected to hold a company-wide meeting sometime today, July 7, 2026, as employees await further details on what comes next.
On a slightly brighter side of things, development on early access title Grounded 2, and the upcoming DLC for The Outer Worlds 2 will continue moving forward despite the downsized team.
XBOX layoffs around 25% of Obsidian's workforce
— Idle Sloth (@IdleSloth84_) July 6, 2026
Kotaku understands that somewhere around 60-70 people were cut. The layoffs included producers, artists, designers, programmers, QA testers, writers, and others who have worked across Obsidian’s prodigious slate of recent releases.… pic.twitter.com/tQpslMOPKJ
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Sending some gaming news your way from a surfing paradise island. Loves creating content, and researching informative facts and useless trivia. A novice in the gaming industry but a veteran in communications and publication.
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