Obsidian Entertainment, the renowned game development studio, experienced a year of mixed results in 2025, with its CEO Feargus Urquhart candidly discussing the highs and lows in an interview with Bloomberg. The studio released three games, but while Grounded 2 emerged as a commercial success, both Avowed and The Outer Worlds 2 fell short of sales expectations.
During the interview, Urquhart acknowledged the underperformance of the two role-playing games (RPGs) launched in 2025. “They’re not disasters,” he stated, emphasizing the importance of learning from these experiences. “I’m not going to say this was a kick in the teeth. It was more like: ‘That sucks. What are we learning?’”
Understanding the Success of Grounded 2
In contrast to the RPGs, Grounded 2 stood out as a success story for Obsidian. The game, which was developed in less than three years following a pitch from Eidos Interactive in 2023, managed to outperform its counterparts in terms of profitability relative to production costs. This rapid development cycle is something Urquhart hopes to replicate for future projects.
The success of Grounded 2 highlights the potential benefits of shorter development timelines, allowing studios to be more agile and responsive to market trends. This approach could be particularly advantageous in the fast-evolving gaming industry, where consumer preferences can shift rapidly.
Challenges and Strategic Shifts
The challenges faced by Avowed and The Outer Worlds 2 are not isolated incidents within the industry. The report also noted that Xbox, Obsidian’s parent company, has implemented a 30 percent profit-margin goal for its internal studios. This financial target has influenced strategic decisions, including the release of first-party Xbox games on the rival PS5 console, a move that reflects the competitive pressures in the gaming market.
For Obsidian, these experiences have prompted a strategic reassessment. Moving forward, the studio plans to balance the production of both large-scale and smaller games, with an emphasis on reducing development cycles and production costs. This strategy aims to mitigate risks and enhance the studio’s ability to adapt to changing market dynamics.
Future Plans and Industry Implications
While no new games have been officially announced by Obsidian, the studio is reportedly working on additional content for The Outer Worlds 2 and Grounded 2. This focus on expanding existing titles may provide a more stable revenue stream while the studio refines its development processes.
The gaming industry as a whole is witnessing a shift towards more efficient production models. As studios like Obsidian adapt to these changes, the implications for game developers and consumers alike could be significant. Shorter development cycles may lead to more frequent game releases, potentially increasing competition and innovation within the industry.
In conclusion, Obsidian Entertainment’s experiences in 2025 serve as a microcosm of broader industry trends. By learning from both successes and setbacks, the studio is positioning itself to navigate the challenges of the modern gaming landscape effectively. As the industry continues to evolve, the lessons from Obsidian’s recent experiences could inform the strategies of other developers seeking to thrive in a competitive environment.
