Bethesda head Jill Braff has told staff that Obsidian Entertainment will remain a "distinct" team with its existing leadership, one day after Xbox moved the studio under Bethesda's umbrella as part of a sweeping reorganisation that cut 268 jobs.

In a memo to staff obtained by IGN, Braff described the Obsidian move as "primarily a change in reporting structure" and confirmed that studio head Feargus Urquhart and his leadership team will continue to run the Grounded and The Outer Worlds developer, now reporting directly to her.

"The creative identity and strengths that make Obsidian distinct will remain at the core of their studio and work," Braff wrote.

What happened on September 22?

Xbox announced the reorganisation in an Xbox Wire post, following earlier reports of planned layoffs. The changes go well beyond reporting lines:

• Obsidian Entertainment moved under Bethesda
• Rare and ownership of the Halo franchise transferred to Activision
• Xbox proposed the closure of Ninja Theory
• A further 268 roles were cut across the division

The scale of the restructuring — a legendary UK studio changing hands, a franchise as significant as Halo shifting publishers, and a proposed studio closure — puts Braff's reassurances to Obsidian staff in context. Obsidian is one of the few units affected by the reshuffle that gains a direct reporting relationship with an established publishing leader rather than facing cuts or relocation.

What does the change mean for Fallout?

The memo clarifies franchise ownership in concrete terms: Bethesda Game Studios retains leadership of Fallout, and Obsidian will collaborate under that structure. Braff said the two teams will "build on their longstanding relationship and the early work already underway on a new Fallout project, with more to share in the months ahead."

That wording confirms active pre-production on a new Fallout title spanning both studios — a notable operational signal, since Obsidian developed 2010's Fallout: New Vegas while Bethesda Game Studios owns the mainline series. Braff framed the arrangement as supporting "the franchise-led model we've been strengthening while keeping accountability for both the studio and the franchise clear."

Are roadmaps or priorities changing?

Braff addressed the question head-on, telling employees across studios, publishing and business teams: "To be clear, we're not resetting our roadmap or asking teams to change what they're focused on."

She added that leadership will "take the time to understand how teams can best support one another, and where closer partnership can benefit our players and fans," with continued communication as the integration progresses.

For developers at Obsidian, the practical takeaway is continuity: same leadership under Urquhart, same project focus, a new reporting line to Braff. For Bethesda, the change consolidates two RPG-heavy studios under one executive at a moment when Microsoft is reorganising its entire games division around franchise-led accountability.

Braff, who said she has known Urquhart and his team for six years, closed the memo on a personal note: "Welcome Feargus and team – more soon!"

The details promised on the new Fallout project, and the fate of Ninja Theory's proposed closure, are the two open questions worth watching as Xbox works through the reorganisation in the months ahead.