Obsidian Entertainment

Obsidian Entertainment, Inc.

Company type	Subsidiary
Industry	Video games
Founded	June 12, 2003 (2003-06-12)
Founder	Feargus Urquhart, Chris Avellone, Chris Parker, Darren Monahan, Chris Jones
Headquarters	Irvine, California , United States
Area served	Worldwide
Key people	Feargus Urquhart (CEO)
Products	Star Wars: Knights of the Old Republic II, Neverwinter Nights 2, Alpha Protocol, Fallout: New Vegas, Dungeon Siege III, South Park: The Stick of Truth, Pillars of Eternity, Pentiment, Avowed
Parent	Xbox Game Studios

Obsidian Entertainment, Inc. is a United States-based video game developer located in Irvine, California, operating as a subsidiary of Xbox Game Studios. The company was established in June 2003 by former employees of Black Isle Studios: Feargus Urquhart, Chris Avellone, Chris Parker, Darren Monahan, and Chris Jones. Initially, Obsidian concentrated on creating sequels for licensed franchises.

Among their early significant works are Star Wars: Knights of the Old Republic II: The Sith Lords and Neverwinter Nights 2, both continuing popular series originally developed by BioWare. Their debut original game was Alpha Protocol released in 2010. Other prominent titles include Fallout: New Vegas, Dungeon Siege III, and South Park: The Stick of Truth, all of which are based on licensed intellectual properties.

Financial difficulties arose for Obsidian due to the cancellation of several projects such as Futureblight, Dwarfs, Aliens: Crucible, and Stormlands. This situation prompted the studio to successfully crowdfund Pillars of Eternity, signaling a strategic pivot towards developing original IPs and stabilizing their finances. The sequel, Pillars of Eternity II: Deadfire, further solidified this new direction.

Microsoft acquired Obsidian in November 2018, placing it under the umbrella of Xbox Game Studios. Recent game launches include the narrative-driven adventure Pentiment and the action role-playing game Avowed. Current development efforts are focused on expanding their catalog with titles such as Grounded 2 and The Outer Worlds 2.

2003: Founding

On June 12, 2003, Obsidian Entertainment was established by Feargus Urquhart, Chris Avellone, Chris Parker, Darren Monahan, and Chris Jones. These founders had previously been part of Interplay Entertainment's division Black Isle Studios, renowned for acclaimed RPGs like Icewind Dale, Planescape: Torment, and Fallout 2, along with collaborations with BioWare on titles such as Neverwinter Nights and Baldur's Gate II. Despite critical acclaim, Interplay’s financial instability combined with losing the rights to the Dungeons & Dragons license caused the cancellation of Baldur's Gate III: The Black Hound. This led Urquhart and key team members to depart and form Obsidian. Initial funding from Parker, Urquhart, and Monahan amounted to between $100,000 and $125,000.

The name "Obsidian Entertainment" was selected for its strong impact and resemblance to their previous employer’s name, Black Isle. Beginning with a team of seven including its founders, Obsidian sought backing from publishers to support its operations. Early proposals included a Might & Magic project pitched to Ubisoft, which ultimately went to Arkane Studios for development into Dark Messiah of Might & Magic. Another concept was Futureblight, a game inspired by the Fallout series pitched to Take-Two Interactive. Neither concept progressed into full production. Efforts to collaborate with Electronic Arts also failed to yield any projects.

Late 2003–2008: Follow-ups to BioWare Titles

Toward the end of 2003, Simon Jeffrey, president of LucasArts, reached out to Obsidian with a proposal to create an action RPG set in the Star Wars universe. Obsidian pitched a first-person lightsaber combat experience featuring characters such as R2-D2. However, LucasArts opted instead to commission a sequel to BioWare's Star Wars: Knights of the Old Republic. Consequently, Obsidian commenced development on Star Wars Knights of the Old Republic II: The Sith Lords in October 2003, targeting a 15-month production schedule. Although the release date fluctuated between late 2004 and early 2005, time limitations necessitated the removal of certain features and polish, which led to technical shortcomings upon launch. Nonetheless, the title garnered favorable critical feedback. Between 2009 and 2012, modding communities restored much of the omitted content.

To handle multiple projects concurrently, Obsidian expanded rapidly from a small group to a workforce of 27 by mid-2004, recruiting experienced developers from studios like Black Isle, Blizzard Entertainment, and Electronic Arts.

Prior to The Sith Lords release, Atari licensed Obsidian to develop Neverwinter Nights 2, a sequel to BioWare’s original game. Development started in July 2005 with an initial team of ten that grew to approximately 50 during production. While Obsidian led the development process, BioWare provided technical assistance. Atari allowed a flexible timeline, postponing the release from Christmas 2005 to October 2006. The game was well-received overall and was supported by two expansions released in 2007 and 2008.

During this timeframe, Obsidian also explored other ventures, including a project for Disney Interactive Studios titled Dwarfs, a third-person action prequel to Snow White and the Seven Dwarves for PlayStation 3 and Xbox 360. Despite advancing into prototyping and spending about a year in development, the project was canceled following Bob Iger’s appointment as Disney CEO and his strategic shift that restricted use of the Snow White franchise. CEO Feargus Urquhart described this cancellation as "heartbreaking" for the team involved.

2009–2014: Alpha Protocol and Licensed Franchises

As work on Neverwinter Nights 2 concluded, Obsidian received interest from three publishers. Electronic Arts sought a role-playing game to compete with The Elder Scrolls IV: Oblivion, another publisher requested a fantasy RPG, and Sega commissioned an action RPG set in the Alien universe called Aliens: Crucible. Although Obsidian submitted a prototype in February 2009, Sega canceled the project three weeks later without evaluating the demo and officially confirmed this cancellation in June. Atari also approached Obsidian about reviving Baldur's Gate III, but funding requirements combined with Atari Europe's sale to Namco Bandai terminated that opportunity.

Sega maintained interest and tasked Obsidian with creating a new "spy RPG", which developed into Alpha Protocol. The project faced difficulties due to unclear creative direction, identity struggles, and publisher-mandated feature cuts. These challenges extended development over four years until its release in June 2010. The game received mixed reviews and underperformed commercially for Sega but cultivated a loyal fan base. Although Obsidian expressed willingness for a sequel, rights ownership by Sega and absence of crowdfunding options prevented progress.

In 2010, Obsidian partnered with Red Eagle Games to produce games based on Robert Jordan's The Wheel of Time, but this collaboration ended after Red Eagle failed to secure necessary financing. Simultaneously, Bethesda Softworks engaged Obsidian to develop a new entry in the Fallout series capitalizing on Obsidian's founders' prior involvement with the franchise. Released in October 2010, Fallout: New Vegas earned critical praise for its improved faction mechanics despite launching with numerous bugs that required significant post-release patches. This marked Obsidian's debut AAA title and provided important lessons in quality control.

Following that project, Obsidian developed Dungeon Siege III, published by Square Enix in 2011. Built on their proprietary Onyx engine, the game launched with better stability than previous efforts though it received mixed critical reception. Around this time, Obsidian began work on Stormlands, an open-world third-person game rumored for Microsoft's next Xbox console. However, Microsoft Studios canceled it in 2012, resulting in layoffs affecting between 20 and 30 employees. The concept evolved into Fallen, which was pitched unsuccessfully to various publishers before ultimately forming the basis for Tyranny.

In late 2009, South Park Digital Studios approached Obsidian about creating a video game set within the South Park universe. Initially skeptical, collaboration with creators Matt Stone and Trey Parker ensured faithfulness to the show's distinctive visual style. Originally funded by Viacom and later published by THQ, the project faced uncertainty when THQ filed for bankruptcy in 2011. Ubisoft acquired publishing rights and eventually released South Park: The Stick of Truth in March 2014.

Obsidian also developed Armored Warfare, an online tank combat game that entered open beta through My.com in 2015. Maintaining strong connections with fellow Interplay-founded studio inXile Entertainment, Obsidian shared technology resources and assisted with inXile's Kickstarter-backed Wasteland 2, which launched to positive reviews in late 2014. This partnership exemplifies Obsidian's strategic collaborations within the RPG sector aimed at broadening their market presence and product lineup.

2014–2018: Economic challenges and Pillars of Eternity

Although Obsidian completed South Park: The Stick of Truth, the company encountered financial strain. They received only a minimal "kill fee" for the unrevealed title North Carolina, and missed out on a bonus tied to Fallout: New Vegas after falling short of Bethesda's Metacritic score requirement by a single point. Executive producer Adam Brennecke highlighted that without securing a new project promptly, the studio faced potential insolvency. With the emergence of Kickstarter, creative director Josh Sawyer suggested funding their previously canceled game through crowdfunding, igniting internal discussions that were ultimately swayed by the success of Double Fine Adventure.

In September 2012, Obsidian launched a Kickstarter campaign for Pillars of Eternity, envisioned as a spiritual heir to Baldur's Gate, aiming to raise $1.1 million. The campaign surpassed expectations by amassing $4 million, setting new records at the time. Published by Paradox Interactive, the game debuted in March 2015 to favorable critical reception. Its expansion, The White March, was released in two segments between August 2015 and February 2016. Additionally, a board game adaptation funded through Kickstarter was successfully introduced in 2015.

Co-founder Chris Avellone left the company in June 2015. Later that year, Obsidian collaborated with inXile Entertainment and Double Fine to establish Fig, an equity crowdfunding platform dedicated to video game projects, with CEO Feargus Urquhart joining its advisory board. Obsidian intended to utilize Fig for financing upcoming titles.

Obsidian contributed localization efforts for Skyforge and secured licensing rights for a digital rendition of the Pathfinder Roleplaying Game, releasing a tablet version in April 2016 and planning additional platform releases. Paizo CEO Lisa Stevens confirmed Obsidian was developing a Pathfinder-based computer RPG. Feargus Urquhart expressed enthusiasm about potential future collaborations with BioWare on Star Wars games and continuing involvement with the Fallout series.

On March 15, 2016, Obsidian unveiled Tyranny, an isometric role-playing game set in a universe where evil has already won. Published by Paradox Interactive, it launched later that year. This title originated from concepts developed during earlier projects such as Fury, Defiance, and the canceled Stormlands. In April 2016, industry veteran Leonard Boyarsky, co-founder of Troika Games, joined Obsidian’s team.

On January 27, 2017, the studio announced Pillars of Eternity II: Deadfire alongside a Fig crowdfunding campaign that achieved its funding goal within 24 hours; the sequel was released in May 2018. In February 2017, Obsidian discontinued work on Armored Warfare, leaving its completion to the publisher.

2018–present: Acquisition by Microsoft

Obsidian Entertainment became part of Microsoft on November 10, 2018, integrating into the Microsoft Studios division. After this acquisition, Obsidian revealed a new intellectual property titled The Outer Worlds, an action RPG set in an alternate future dominated by megacorporations colonizing distant planets. It launched on October 25, 2019, across Microsoft Windows, PlayStation 4, and Xbox One, followed by a Nintendo Switch release in June 2020. In November 2019, Obsidian introduced Grounded, a survival adventure featuring characters shrunk to ant size.

During the July 2020 Xbox Games Showcase, Obsidian announced Avowed, a new role-playing title under development for Microsoft Windows and Xbox Series X. In 2021, details about an undisclosed open-world project emerged through job listings and were later confirmed as The Outer Worlds 2 at the Xbox + Bethesda E3 2021 presentation.

In 2022, Obsidian revealed Pentiment, a narrative-driven adventure scheduled for release in November 2022 on Microsoft Windows, Xbox Series X/S, and Xbox One. The project is helmed by Josh Sawyer, noted for his previous work on Fallout: New Vegas.

Philosophy

Obsidian initially gained recognition by creating sequels for well-known franchises including Star Wars: Knights of the Old Republic, Neverwinter Nights, Fallout, and Dungeon Siege. According to founder Feargus Urquhart, working on sequels is rewarding because it offers the opportunity to deepen existing narratives and expand established universes, while projects based on licensed properties tend to streamline the development process. These sequel projects acted as foundational experiences that eventually enabled the studio to concentrate on developing original intellectual properties, a strategic move aimed at enhancing creative autonomy and minimizing publisher limitations. The company has also utilized Kickstarter crowdfunding campaigns as a way to gauge interest in new game ideas and genres.

Prior to its 2018 acquisition by Microsoft, Obsidian prioritized flexibility in adapting to changing market conditions, focusing primarily on character-centric role-playing games while also experimenting with smaller-scale titles across various genres. This strategy resulted in games such as Armored Warfare, an MMO centered around tank combat, demonstrating the studio’s intent to diversify its portfolio.

To honor its founders, Obsidian created a dungeon crawler arcade game installed within their office premises, reflecting the company’s entrepreneurial values and internal culture.