Abdelrahman
In 2022, Obsidian Entertainment stood out as the sole first-party Xbox studio to launch a new title, Pentiment. Fast forward to 2025, and this Microsoft-owned studio has already released a major RPG, Avowed and will soon unveil another title, The Outer Worlds 2, later this year. It’s now evident that Obsidian has swiftly evolved into one of the most crucial and esteemed studios within the Xbox portfolio.
Reflecting back to E3 2018, during Microsoft’s significant showcase, Xbox leader Phil Spencer announced a significant acquisition of four independent studios: Playground Games, Ninja Theory, Compulsion Games, and Undead Labs. He also hinted at the inception of a new studio, The Initiative, which would later be tasked with rebooting Perfect Dark. By the end of 2018, Xbox expanded its acquisitions with two additional studios: InXile and Obsidian. This was followed by the purchase of Double Fine in 2019, culminating in a robust roster of first-party developers.
Now, almost seven years have passed, and while all these studios continue to operate, their output has been relatively modest. As of February 2025, here’s an overview of their current status:
- The Initiative: No game released yet, currently developing Perfect Dark.
- Double Fine: Last title, Psychonauts 2, launched in 2021, predating their acquisition by Xbox.
- Compulsion Games: Their latest release was We Happy Few (2018), with South of Midnight set to debut this year.
- Undead Labs: Released State of Decay 2 (2018), a title published by Xbox Studios.
- InXile Entertainment: Last game was Frostpoint VR (2020), a short-lived VR shooter that wasn’t published by Xbox.
- Playground Games: Launched Forza Horizon 5 (2021), with the Fable reboot on track for release this year.
- Ninja Theory: Released Hellblade 2 (2024), with Bleeding Edge also under Xbox published in 2020.
- Obsidian Entertainment: The last title released was Avowed (2025), with Outer Worlds 2 coming this year. Previous releases include Grounded (2020) and Pentiment (2022).
Looking at this list reveals that Obsidian is an anomaly among Xbox studios. Many, if not most, of the studios acquired or established around 2018 have only released a handful of titles, with some of these projects initiated prior to their Xbox association. Others, like Compulsion, are finally seeing new releases after several years.
Comparatively, The Coalition hasn’t introduced a new Gears title since Gears 5 in 2019, while Rare last produced a game in 2020 with Battletoads—despite contributing significant support to Sea of Thieves.
In contrast, Obsidian has successfully delivered three games since 2018 under Xbox and is poised to launch yet another significant RPG this year. They also released Outer Worlds in 2019, which, though developed before the Xbox acquisition, highlights their ongoing productivity as a studio. Furthermore, there are whispers of additional projects already in the pipeline. So, what has contributed to Obsidian’s rise in prominence?
How Obsidian Became Xbox’s Most Valuable Studio
Recently, during the DICE Summit, Obsidian Entertainment’s VP of Operations Marcus Morgan and VP of Development Justin Britch elaborated on the studio’s strategy of remaining streamlined while making well-considered investments in mid-sized projects that can be completed in less than ten years. They underscored the importance of maintaining a low headcount and minimizing staff turnover to accumulate institutional knowledge.
Their vision? To pave the way for Obsidian’s longevity, aiming for a one-hundred-year lifespan. When asked about this ambitious goal during the discussion, they affirmed, “Are we serious? … Yes.”
It seems likely that Obsidian can achieve this ambitious objective. They appear to have cultivated a skilled team capable of effectively developing well-defined games with relatively small teams while handling multiple projects concurrently.
In a gaming landscape where many studios frequently experience layoffs and devote five to seven years to a single game, Obsidian has successfully carved out a different route. The result is one of the most efficient and triumphant studios in the industry. Undoubtedly, Microsoft is pleased with their acquisition back in 2018.
