Obsidian: Xbox’s Quiet Game-Changing Secret

In the bustling year of 2022, Obsidian Entertainment stood out as the sole first-party Xbox studio daring to present a new game to its eager audience. Fast forward to 2025, and the studio, now under Microsoft’s wing, has already unleashed Avowed, a massive RPG, with another exciting venture, The Outer Worlds 2, slated to drop later this year. Obsidian is undeniably carving its niche as a powerhouse for Xbox.

The Rise of a Gaming Titan

Let’s flick back to E3 2018, where Xbox’s head honcho, Phil Spencer, took the stage with big news. Xbox was on a game studio shopping spree, bringing aboard Playground Games, Ninja Theory, Compulsion Games, and Undead Labs. They didn’t stop there, later unveiling The Initiative, a fresh studio handed the keys to reboot Perfect Dark. Not long after, InXile and the now-mighty Obsidian also joined the Xbox family. By 2019, Double Fine was in the fold too. At that point, Xbox boasted a mountain of in-house creative talent.

Fast forward almost seven years, however, and many of these studios haven’t released many new titles. As of February 2025, the landscape looks something like this: The Initiative is still crafting Perfect Dark, with no game release yet. Double Fine’s last project? Psychonauts 2 back in 2021, a production that began before Xbox took the reins. Meanwhile, Compulsion Games has finally pulled together South of Midnight, their first output since 2018’s We Happy Few. Elsewhere, Undead Labs hasn’t released a main title since State of Decay 2 in 2018.

Obsidian: Standing Out Amongst the Crowd

Obsidian Entertainment, however, seems to be writing its own success story within this group. Since 2018, while part of Xbox, Obsidian has launched Grounded, Pentiment, and Avowed. The studio also plans to drop The Outer Worlds 2 this year. Remarkably, before their merger with Xbox, they also shifted gears with Outer Worlds in 2019—a standout RPG that wasn’t even published by Microsoft at the time.

So, why does Obsidian succeed where others seem to stall? At a recent DICE Summit, Marcus Morgan, VP of operations, and Justin Britch, VP of development at Obsidian, shed some light. Their strategy involves staying lean, investing smartly in medium-sized games, and avoiding decade-long development cycles. By keeping their headcount low and turnover even lower, they’ve accumulated invaluable institutional knowledge. Their ambition? To see Obsidian thrive for a century—yes, a full 100 years.

The Secret Sauce of Success

This ambitious game plan seems feasible given their track record. Obsidian’s team excels at building well-scoped games with relatively small teams, all while juggling various projects simultaneously. In today’s gaming landscape, where extended production times and lay-offs plague many studios, Obsidian’s approach becomes a standout shift. Their productivity and success testify to a thriving studio culture, and it’s easy to see why Microsoft chose to bring them into the fold in 2018.

In this competitive gaming world, Obsidian Entertainment is proving itself as one of the most valuable assets Xbox has. They’ve not just survived; they thrive, setting a benchmark in an industry often bogged down by its own enormity.