Report: Microsoft Close to Buying Obsidian Entertainment

Microsoft will likely be continuing its buying spree with an acquisition of Obsidian Entertainment. Kotaku reported that Microsoft is finalizing a deal with the independent developer. Obsidian Entertainment is known for their role-playing games, and have released over 10 games on various platforms.

One of Kotaku’s sources said, “it’s a matter of when, not if.” Microsoft has bought or built a number of studios this year, and adding another to its utility belt seems likely. Microsoft purchased Playground Games (Forza Horizon), Ninja Theory (Hellblade: Senua’s Sacrifice), Undead Labs (State of Decay), and Compulsion (We Happy Few) earlier this year. Microsoft also formed The Initiative, a new studio led by ex-Crystal Dynamics Darrel Gallagher. The upcoming X018 event would be a likely place for Microsoft to announce the acquisition of Obsidian Entertainment.

Microsoft’s impending acquisition makes a lot of sense for both companies. Microsoft gets another feather in its cap — a beloved RPG developer with industry veterans — and Obsidian gets financial stability. The independent developer has struggled to make ends meet as various games under-performed, were canceled, or met other cruel fates. Microsoft and Obsidian had worked together on an RPG called Stormlands that was set to release for the Xbox One. That game was canceled in 2012, and their relationship soured. Microsoft has a new head of Xbox — Phil Spencer, who took over in 2014 — and that could be contributing to this new deal.

Obsidian Entertainment was formed in 2003 by a number of Black Isle Studios veterans including Chris Avellone and Feargus Urquhart. At Black Isle they were part of the team that developed Planescape: Torment and Fallout 2. Black Isle worked frequently with BioWare and helped develop Neverwinter Nights, and the Baldur’s Gate games. Obsidian Entertainment got its start after Urquhart, Avellone, and others left Black Isle because of Interplay’s financial troubles.

Obsidian’s first game was Star Wars Knights of the Old Republic II: The Sith Lords, a sequel to BioWare’s 2003 release. Obsidian went on to work with BioWare on Neverwinter Nights 2 and then the sci-fi RPG Alpha Protocol for Sega. The team released Fallout: New Vegas for Bethesda Softworks in 2010. New Vegas wasn’t as well received as Bethesda would have liked, and Obsidian’s contracted Metacritic score bonus was missed by one point.

Obsidian worked on South Park: The Stick of Truth for several years while the team struggled financially. The team brought “Project Eternity” to Kickstarter in 2012, and they looked at that game as a last-ditch effort. The Kickstarter was successful, leading to the release and warm reception of Pillars of Eternity. Obsidian released Tyranny in 2016 and followed that with Pillars of Eternity II: Deadfire in 2018.