Obsidian has famously been caught up in the recent Xbox reset , with the game studio losing as much as 25% of its staff to layoffs. According to recent insider reports out of Bloomberg, one of the consequences of the headcount reduction appears to be a narrower focus, which in this case has resulted in the effective cancellation of Avowed 2. The publication's sources say that the studio made the decision to cancel Avowed 2 due to the lackluster commercial performance of the first game in the series. The studio had previously hoped to build the Avowed franchise by rapidly developing the game's sequel on top of tech it already had.

In lieu of Avowed 2 and the other canceled projects, Obsidian will now begin development on a new Fallout game led by Josh Sawyer, who previously worked on Obsidian's Fallout: New Vegas, which would go on to become a fan-favorite Fallout game. The success of New Vegas is likely the reason that Sawyer and Obsidian have been tasked with developing another Fallout game, and insiders claim that Sawyer had been working on a separate game that was structurally and thematically similar to Fallout.