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Schreier: Obsidian Entertainment is Changing its Game Development Approach
Renowned insider, journalist, and writer Jason Schreier has once again unsheathed his pen to tell gamers another story. This time, the Bloomberg author wrote about Obsidian Entertainment.
The company is seeking a way to survive and find a path for growth in an industry where budgets are rising faster than sales. The studio, owned by Microsoft, is changing its development approach: it wants to make games faster, cheaper, and without team burnout.
Last year was both successful and concerning for the studio. Obsidian released three games at once — Avowed, Grounded 2, and The Outer Worlds 2. For a team of roughly 280 people, this is a very impressive result. However, only Grounded 2 met Microsoft's sales expectations. The other two titles didn't fail, but they also didn't reach the bar set by the "green" company.
According to studio head Feargus Urquhart, this is not a catastrophe, but rather a reason to figure out what went wrong and what conclusions should be drawn.
The main problem is timelines and budgets. Avowed and The Outer Worlds 2 were in development for over six years. During that time, costs increased, and with them, the publisher's expectations. Now Obsidian aims to complete projects within three to four years. In current conditions, this is a matter of survival: development costs have grown from millions to hundreds of millions of dollars over the past decades, and one unsuccessful release can be fatal.
As Schreier notes, the situation is exacerbated by the general industry crisis. Market growth has slowed, thousands of developers have lost their jobs since 2023, including Xbox employees. At the same time, Microsoft demands high profitability from its studios. Against this backdrop, Obsidian is trying to maintain stability by not inflating its staff and not betting on a single blockbuster.
The Grounded 2 experience was instructive for the team. Part of the development was outsourced to partners at Eidos Interactive. Obsidian co-founder Chris Parker, who oversaw the project, notes that this format simplified making tough decisions.
For example, initially, rideable insects were planned to be shared among multiple players, but the mechanic didn't work as intended. The team quickly abandoned the idea and changed the design. According to Parker, if an internal team had been leading the project, attempts to "force" the solution would have taken months more. With outsourcing, the decision was made immediately because managers could clearly specify what needed to be changed. This experience showed Obsidian that internally, they often act too cautiously and delay difficult but necessary decisions.
Another important step for development is reusing technology. Urquhart states plainly that not every game needs a new animation system or a completely redesigned interface. As an example, he recalls Fallout: New Vegas, created on the foundation of Fallout 3 in two years and for relatively little money. The question Obsidian now asks itself more and more often is simple: "Do people really care that much that we spent an extra hundred man-months on the inventory screen?"
Interestingly, the studio's leadership is already preparing its successors. Urquhart is gradually transferring more responsibility to his deputies Justin Britch and Marcus Morgan. Their philosophy is moderate growth, multiple projects simultaneously, and a focus on stable "good" games rather than chasing trends. Obsidian has honed this approach over the years and considers it its main advantage.
At the same time, the studio understands it will have to continue navigating between creative freedom and Microsoft's demands. The success of niche but inexpensive projects like Pentiment shows that risk can still pay off. The main thing is for Xbox to continue valuing not only sales but also reputation, awards, and contributions to the Game Pass ecosystem.
At recent breakfast meetings, Obsidian's management analyzed what could have been done better in last year's releases. Avowed might have lacked small systems that bring the world to life, like the ability to break the law and face the consequences of your decisions. The Outer Worlds 2 could have better-developed companions and made them more memorable. According to management, such details rarely seem decisive on paper, but they can significantly influence the game's perception and audience interest.
In the coming years, Obsidian plans to alternate between large and smaller-scale projects, release new content for The Outer Worlds 2 and Grounded 2, and avoid clustering releases in the same period. The studio is not developing a third part of The Outer Worlds, but it intends to further develop the Avowed universe. The team is pleased with the results of 2025 but does not want to repeat the "Year of Obsidian" format.