By Olivia Davis | Apr 23, 2026
According to the Senior Designer, in the early days of developing Fallout: New Vegas, there was significant conflict brewing between the two studios due to the extreme pressure that Bethesda put on Obsidian to produce an excellent quality game product, which Bethesda compared to other titles that had been produced by different video game development studios (however, it was not released).
In fact, shortly after the first initial development cycle had ended, Bethesda then created a time-wasting "visual slide presentation," which basically provided Obsidian with all errors, mistakes, and/or issues that they (Obsidian) made developing and creating the Fallout: New Vegas title.
The former Senior Designer did point out that although the quality of the developed title has increased in popularity and reputation among gamers since the release of said title, the inner workings of its development will likely never change. Bethesda was creating The Elder Scrolls 5: Skyrim when it hired Obsidian to develop a spin-off title with existing assets. Bethesda only gave Obsidian 18 months to develop the game. Fallout: New Vegas launched with a host of bugs, but over time, fans began to equate it with being the best game of the entire series, from their point of view.
Recent interviews with former Senior Designer Chris Avellone on the TKs-Mantis YouTube channel revealed that Bethesda provided Obsidian a formal PowerPoint presentation detailing their dissatisfaction with the work Obsidian had done, including any issues Obsidian experienced regarding downloadable content.
Avellone talked about how they sat through that meeting with obvious frustration because the development team believed they had put together a quality product that helped keep the Fallout name in the public eye while Bethesda was otherwise focused.
Avellone noted that Bethesda "got a very nice return on investment" from the success of the game, while simultaneously voicing their displeasure; therefore, the development team found this combination of events to be very demoralizing.
The issues between the two studios extended into technical aspects as well. During one of his interviews, Avellone said it would be reasonable for any video game to run at 30 frames per second and that he felt this was an appropriate baseline for all games.
Bethesda's technical director, though, later called him aside and scolded him for making that statement. While Avellone tried to appear calm on the outside when being scolded for making that statement, he was questioning in his mind why the engine that he was using could not meet what he considered to be a minimum level of performance.
Avellone expressed to Urquhart the possibility that there might not be any technical capability within Bethesda's current engineering team to make a remaster of the game, and therefore no way to get the game to live up to his vision.
The Source Code Dispute
Breaches of contract between Bethesda and Obsidian also contributed to the breakdown in the working relationship between the companies. According to Avellone, the last required milestone for the contract between both developers was for Obsidian to provide Bethesda with the source code of Fallout: New Vegas in exchange for ten thousand dollars.
For reasons known only to Urquhart, the studio head for Obsidian, he failed to fulfill that milestone and to deliver the source code to Bethesda. Avellone has indicated that Urquhart and the rest of the team at Obsidian may have perceived that the total cost of developing and releasing New Vegas had been greater than the benefit that the studio had received from working on the title.
Urquhart may have also withheld access to the game's source code from Bethesda as a means by which to restrict their control of the game and its future development in some way.
Unfortunately, the impact of this decision has continued to be felt by all involved, since it has created obstacles to any subsequent efforts to continue or update the game.
Review Scores of Post-Launch DLC Were Used To Justify a Negatively Impacted Relationship
In addition to the financial ramifications of New Vegas, both Avellone and Urquhart acknowledged that the reception of the game's post-release downloadable content (or DLC) played a major role in deteriorating the studio's working relationship with Bethesda.
Avellone noted that while the game's first major piece of expansion content (Dead Money) was intended to have a survival-horror theme that differed significantly from what players had experienced thus far in the standard version of New Vegas, the large-scale tonal change resulted in the overall response from the video game press being far less favorable than the reviews written for the standard version of New Vegas had been.
Consequently, after Dead Money was released, Bethesda used the low review scores of the DLC against Obsidian to defend their decision not to continue working with the studio on additional projects, stating that the poor reception of Dead Money was evidence of how poorly the two companies' partnership had performed as a result of the lack of interest in Dead Money.
Hopes For Successors Were Ruined by New Directions
Despite the growing tension between the two companies, the team at Obsidian genuinely thought that they would have opportunities to work together in the future to create sequels and expansions to New Vegas. Avellone shared that Obsidian was fully confident that they would have an opportunity to lead the development of a successor project, which many of them informally referred to as New Vegas 2.
Soon after Bethesda made it apparent that they intended to develop future iterations of the Fallout brand independently in-house, the dream of creating a sequel to New Vegas came to an abrupt end.
One particularly intriguing idea that was developed by some of the developers while collaborating on New Vegas was for a game set in New Orleans, based on an idea taken from a comic book called Grendel, which Avellone thought would fit very well within the Fallout narrative.
Although Avellone had an immediate vision of what a Fallout based on the Grendel setting would look like and how it would play, he expressed serious doubts that any future games in this vein would ever be made in the foreseeable future, citing a six-year minimum time frame for such an event to even begin.285
