Xbox Speeds Up Fallout Development, but Former Bethesda Dev Warns of 'Fan Fatigue' — Could Obsidian Step In?

New Xbox boss Asha Sharma is reportedly accelerating development on new entries in The Elder Scrolls, Fallout, and Halo series as she prepares to hit the "reset" button on Microsoft's gaming business. Fallout fans are eager to see what's next for the post-apocalyptic franchise, but one former Bethesda developer has cautioned against rushing out new games too quickly.

The last mainline Fallout title was 2018's Fallout 76, which introduced multiplayer to the traditionally single-player RPG series. It's been over a decade since Fallout 4 launched, and the promised Fallout 5 — which won't arrive until after The Elder Scrolls 6 — still seems far off.

Could Bethesda follow The Elder Scrolls IV: Oblivion Remastered with a remaster of Fallout 3 or New Vegas, or perhaps even a Fallout: New Vegas 2 as a stopgap? In a recent IGN interview, Todd Howard remained coy on the possibility, though remasters are reportedly still in the works.

Microsoft clearly wants more from Fallout and its other big franchises, and fans are eager for news. But Skyrim lead designer Bruce Nesmith, who left Bethesda after Starfield's development, warned that faster sequels "risk fan fatigue."

Speaking to FRVR, Nesmith said: "In my opinion, the biggest risks of shortened schedules are quality, reduced features, polish, or bugs. The things that are done last end up getting set aside to complete the game on time. And of course faster dev times would result in faster sequels. But that's the wrong question. Those sequels risk disappointing fans."

One potential solution is having other studios develop mainline sequels or spin-offs. Could Bethesda tap Microsoft-owned Obsidian, the developer behind Fallout: New Vegas, to create Fallout: New Vegas 2?

In a recent interview with The 41st Precinct, New Vegas director Josh Sawyer, who is still at Obsidian, said he's not making a new Fallout game until he is — because that decision comes from above, as it did when he was tasked with New Vegas.

"These are things that take place above my head, right?" Sawyer responded when asked if Obsidian might be given another chance to work on Fallout. "I'm just a director. I'm the studio design director, which is kind of an advisory position to the teams, and then I'm a game director. But there are titans above me who decide what happens with IPs and things like that. It's not up to me."

When asked if he might one day find out he has to make a Fallout game, Sawyer replied: "Well, it's how it happened with New Vegas, so who knows?"

Obsidian currently has no announced new project after Avowed and The Outer Worlds 2 failed to meet commercial targets. Rumors suggest another Avowed game is in the works, but The Outer Worlds 3 reportedly isn't. On a positive note, Grounded 2 — another 2025 launch — was a hit. But of the three games Obsidian released last year, it had the shortest and likely cheapest development period.

"I know everyone on the internet, on every game we ever announce, will constantly reference back to, 'When's the next New Vegas?'" Obsidian's VP of operations Marcus Morgan said last year, referencing the studio's beloved Fallout game that inspired the hit Amazon TV series' second season setting.

Xbox CEO Asha Sharma sent shockwaves through the industry with her "reset" memo, revealing that Microsoft's gaming business has a 3% accountability margin (likely profit margin). "Excluding Activision Blizzard King, over the past five years, we have spent over $20 billion on ongoing investments in our content, platform, and hardware subsidy, but our annual revenue has declined nearly half a billion during that time. Going forward, this cannot continue," Sharma said.

Bloomberg's Jason Schreier has warned of a "bloodbath" at Xbox, with five studios reportedly under threat of closure. Meanwhile, Microsoft is reassessing its investment in externally developed games. It recently pulled funding for IO Interactive's upcoming fantasy project, which Xbox was set to publish. Hideo Kojima's Xbox horror game OD, however, is safe.

Microsoft told Bloomberg it is "taking a fresh look at where we invest so we’re focusing on our highest priorities." The company added: "We're not reducing our overall investment in games. We expect to invest about the same in content as we did last year. What's changing is where we're investing and the kinds of projects we're backing."

It increasingly appears that means investing more in franchises like Fallout. Earlier this month, The Information reported that Sharma plans to "boost spending on new Xbox games from its most popular franchises to excite die-hard fans," while also making significant layoffs. Fallout and Elder Scrolls are said to be "two particular areas of focus" due to their "iconic status in the gaming world" and the fact that they haven't produced new mainline titles in years.