I'm not saying Microsoft needs to shut down a project--Microsoft needs to maybe make the studios focus on 1-2 projects at a time and have them work on the projects in order. The relationship between a publisher and a developer is a two-way relationship. The studios should be able to understand that their publisher needs games for the console's launch (an event that happens once in 7-8 years). I don't think it would have been unreasonable to ask the developers to get one game ready for the launch. A smaller game like Miles would have been enough to kill the annoying narrative that Xbox doesn't have games.
Grounded had the potential to be bigger than it is. No developer would say no to more resources given to their game. Hell, Microsoft could have outsourced developers for Grounded and it could have made a good family-friendly launch exclusive.
Obsidian has experience in building games, yes. I know a lot of people here are excited that they're working on 4-5 (or was it 6?) projects at the same time, but it just makes me worried. 1-2 great games are better than 4-5 half-assed ones with limited resources. I want Obsidian's games to be big and deep as New Vegas instead of mediocre like The Outer Worlds.
When Microsoft bought Obsidian, they knew they would not get a launch title from them for their new console. Sure, they could have forced Obsidian to put 50 people on Grounded. Instead of the narrative being "15 devs are working on a passion project" the internet would be full of "MS forced these poor CRPG making devs to work on a survivor game to get a launch title". That would be horrific PR for MS. Not to mention it would ruin Grounded. Those devs truly want to work on it and it shows.
If you've looked at the credits on Grounded, you can see that's a lot of outsourcing already being done. They can't outsource the whole game.
Obsidian is doing what Microsoft wants from the studios. Steady flow of games for the service. If Obsidian worked on two big games at a time, it would mean 2-3 years between the projects. Not to mention it would burn out the staff members at Obsidian.
There's a bunch of talented devs at Obsidian who've been waiting for the opportunity to work on small/mid sized passion projects. Now they finally have the financial backing and the green light from MS. Those won't be some half-assed games, they will be made with passion and worked on until they are ready. It keeps the staff at Obsidian happy and in the company. It also gives GamePass a steady flow of games from Obsidian. If they can deliver 1 game each to the service, they are doing great and if those bigger games are released 2-4 years apart, it's not that different than it would be in scenario where everyone worked on the bigger projects.
Not to mention those smaller games give them opportunities to try out new things. Things that would not want to try out on a bigger game for the first time.
I would not call Obsidian's resources limited. They've grown those departments that have needed it the most. Animation and Audio departments have grown rapidly. I believe they've also added 3 or 4 new Narrative designers.
Obsidian has always had the culture of working on multiple projects at the same time. So they know what they are doing when it comes to spreading the manpower and using it wisely, so people are not just waiting around for something to do when their part in some project is finished. For example artists are usually done with their work way sooner than programmers, designers, audio guys and q&a. Most of the narrative designers are not needed in the very early stages or when they are about wrap up development. You want to have projects you can shift those people to with out a hitch. This is something Brian Fargo talked about when they were asking money for Wasteland 3, even though Torment wasn't yet released. It keeps people employed at the company, instead of them having to terminate contracts because there's no project that they can work on. And yes, in a perfect world the development cycles with 2 games would always be just perfect and you could just shift people from the 1st game to the 2nd.
But mostly it comes to down to the fact they want to keep their staff members and it means giving them a break from bigger projects and granting them freedom to work on something that they really want to make. GamePass is perfect for that.