Obsidian Has Quietly Become Xbox’s Secret Weapon

In 2022, Obsidian Entertainment was the only first-party Xbox studio to ship a new game, Pentiment. And in 2025, the Microsoft-owned studio has already launched one big RPG, Avowed, and is set to release a second one, The Outer Worlds 2, later in the year. If it wasn’t clear before, it is now: Obsidian has quietly become one of Xbox’s most important and valuable studios.

Let’s flash back to E3 2018. During Microsoft’s big showcase that year, Xbox boss Phil Spencer announced that the company had purchased four different independent game studios: Playground Games, Ninja Theory, Compulsion Games, and Undead Labs. Spencer also confirmed a new studio called The Initiative had been created which, we would later learn, was charged with rebooting Perfect Dark. Later in 2018, Xbox announced it was buying two more studios: InXile and Obsidian. Finally, in 2019, Xbox bought Double Fine. After the Xbox maker’s studio shopping spree, it had a massive stable of in-house developers.

Flash forward to today, almost seven years later, and while all of those studios still remain, they haven’t released that much. Here’s where they stand as of February 2025:

• The Initiative – Has yet to release a game. Working on Perfect Dark.
• Double Fine — Last game released: Psychonauts 2 (2021) – Production began before Xbox acquisition.
• Compulsion Games – Last game released: We Happy Few (2018) – Production began before Xbox acquisition. South of Midnight is coming this year.
• Undead Labs – Last game released: State of Decay 2 (2018) – Published by Xbox Studios.
• InXile Entertainment – Last game released: Frostpoint VR (2020) – A VR shooter that barely lasted four months. Not published by Xbox.
• Playground Games – Last game released: Forza Horizon 5 (2021) – Published by Xbox. Fable reboot set for this year.
• Ninja Theory – Last game released: Hellblade 2 (2024) – Also released Bleeding Edge in 2020 under Xbox.
• Obsidian Entertainment – Last game released: Avowed (2025) – Set to launch Outer Worlds 2 this year. Previously, under Xbox, launched Grounded in 2020 and Pentiment in 2022.

It’s clear, when looking at that list above, that Obsidian is the outlier. Most of the studios Xbox bought or created around 2018 have only shipped maybe one game, and some of those were in development before the Xbox deal. Other studios, like Compulsion, are finally releasing something after seven years of Xbox ownership. And if you look at other Xbox studios, things aren’t much better.

The Coalition hasn’t launched a new Gears game since Gears 5 in 2019 and Rare hasn’t made a new game since 2020’s Battletoads. (Though the studio does a lot of support on Sea of Thieves.)

Meanwhile, Obsidian has shipped three games since 2018 under Xbox and has another big RPG landing later this year. And it released Outer Worlds in 2019, a game which started production before the Xbox deal and wasn’t published by Microsoft, but was yet one more big RPG from the company in a relatively short span of time. And there are rumors of the company already working on a new project, too. So how did the studio reach this point?

How Obsidian became Xbox’s most valuable asset

Well, during a talk at DICE Summit earlier this week, Obsidian Entertainment VP of operations Marcus Morgan and VP of development Justin Britch talked about the company’s philosophy of staying lean and making smart investments in medium-sized games that don’t take a decade to make. The studio heads also emphasized keeping headcount low and aiming for as little turnover as possible to help the studio gain more institutional knowledge.

The goal: The duo want Obsidian to last 100 years. Really. When asked about the goal of keeping the studio around for 100 years, long after they are dead, they said: “Are we serious? … Yes.”

And honestly, I think Obsidian can pull it off. It clearly has a team of people who understand how to build properly scoped games using relatively small teams while managing multiple projects at once.

In an industry where some studios lay people off all the time and spend five to seven years working on one game, Obsidian has gone a different path. And the end result is one of the most productive and successful studios around. I bet Microsoft is happy they snagged the place up back in 2018.

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