Avowed 2 may not be fully dead as Obsidian reportedly keeps working toward a new Xbox pitch

Avowed 2 may still have a small chance of survival despite reports that Xbox canceled the project during its recent internal reset. According to Chris Avellone, Obsidian is still doing some work on the sequel in the hope of re pitching it to Xbox later. The claim has since gained more weight after Jason Schreier said that a small team at Obsidian is continuing work on Avowed 2 while waiting for other projects to become ready.

The situation appears complicated rather than final. Avowed 2 was reportedly canceled as Xbox reshaped its first party strategy, with Obsidian being pushed toward a new Fallout project instead. However, the updated claim is that the sequel had already moved far enough along in early development that some people at the studio believe it could still be revived if they can show Xbox a more complete and lower risk version of the project.

That does not mean Avowed 2 is officially back in production. It means the game may be sitting in a strange middle ground: canceled from a business standpoint, but not fully abandoned inside the studio. If Obsidian can keep development moving with a small team and prove that the remaining cost is manageable, Xbox could still reconsider.

Obsidian’s future now appears tied to Fallout while Avowed 2 waits for another chance

The reported reason behind the change is Xbox’s wider restructuring. The company is said to be focusing more heavily on larger franchises, and Fallout is one of the strongest RPG brands under Microsoft’s control. Obsidian’s history with Fallout: New Vegas makes the studio an obvious candidate for a new entry, especially if Josh Sawyer is involved.

The rumored Fallout project may also pull in other Obsidian veterans. John Gonzalez, who was reportedly working on a Shadowrun related project, is now expected to be connected to the Fallout effort. That would make sense, as he previously served as lead writer on Fallout: New Vegas. Obsidian also has classic Fallout veterans Leonard Boyarsky and Tim Cain, though their exact involvement remains unclear.

The most disappointing part for RPG fans may be the reported pause on Shadowrun. Obsidian would have been a strong fit for that setting, which blends cyberpunk, fantasy, corporate intrigue, magic, and tactical storytelling. The project was never officially announced, so there is no cancellation in the public sense, but the report suggests it is not moving forward right now.

Avowed 2 is also an interesting case because the first game was tied to the Pillars of Eternity universe. If Xbox does not approve a sequel, it could mean a longer wait for anything connected to that world. There is no clear sign of a new Pillars of Eternity game either, which leaves that setting in a difficult position.

For Xbox, the decision comes down to priorities. A new Fallout has a wider audience and clearer commercial value. Avowed 2 would likely be a smaller bet, but it could still make sense if development is already far enough along and if Obsidian can contain the remaining cost.

For now, the safest reading is that Avowed 2 is not alive in the usual sense, but it may not be completely dead either. A small team is reportedly keeping the project warm, hoping that enough progress can convince Xbox to let it move forward. Whether that happens will depend on budget, timing, Xbox’s appetite for smaller RPG sequels, and how quickly the new Fallout project ramps up.