The Game Business: Obsidian Entertainment among Xbox studios negotiating to avoid closure [Update 2: Obsidian mention a mistake]

The Outer Worlds and Grounded developer Obsidian Entertainment is among the studios negotiating with Xbox to avoid closure, according to a The Game Business report.

Update 10:43 a.m.: Bloomberg reporter Jason Schreier has posted to Bluesky, “Despite a report this morning, I can confirm that Obsidian is not in negotiations to avoid shutting down. Plenty of details are still up in the air surrounding the layoffs (picture will be clear on Monday), but Xbox is keeping Obsidian, according to people familiar with the situation.”

Update 12:48 p.m.: In a tweet, The Game Business said, “Obsidian was listed as a company in negotiation with Xbox over potential closure. This was a mistake.”

Obsidian Entertainment joins studios including Arkane Studios, Compulsion Games, Double Fine Productions, Ninja Theory, and Undead Labs, all of which have been previously reported as facing potential closure or spinoff.

According to the report, February-appointed Xbox CEO Asha Sharma has brought a “start-up mentality” into the organization, asking teams that are used to weeks of planning and countless meetings to turn things around in days to hours.

The announcement of Xbox Series price increases last week was reportedly thrown together the same day, after Apple announced its own price increases.

Certain Xbox studio heads also feel Sharma is listening too much to consultants rather than the developers making the games.

Numerous people within Xbox who spoke privately to The Game Business feel there is too much “listening to Twitter” happening at Xbox, questioning the organization’s reinvestment in hardware amid an ongoing component crisis and a declining console market, and doubting the impact of an exclusive Gears of War: E-Day on hardware sales.

“We’re chasing a declining market with franchises that are past their prime,” said one studio boss.

Another studio boss, when asked about Xbox’s recent decisions, shrugged and said, “After Activision, this is Amy [Hood] and Satya [Nadella]’s Xbox now.”