Unconfirmed: Obsidian's Cancelled Project North Carolina Was For Microsoft's Next Xbox

I have more than a few reasons to believe the report is factual, but given the fact that Kotaku's article is labeled as a "rumor", I'll leave it as "unconfirmed" for now. The disappointing word from the gaming blog is that Project North Carolina was in development for Microsoft's next Xbox, and after seven months of development, the console game behemoth decided to shut it down, resulting in Monday's layoffs and an understandably distraught company CEO:
Obsidian's ill-fated 'North Carolina' game was slated for the next Xbox and published by Microsoft, according to sources familiar with the project who spoke to Kotaku today.

Yesterday, after almost seven months of development, Microsoft cancelled the project, our sources said. Obsidian consequently had to let go of 30 people, as reported by several outlets this morning.

One source close to the project informed Kotaku that Obsidian CEO Feargus Urquhart choked up while addressing the company during a meeting yesterday afternoon. While he normally projects loudly, the source said, he was chillingly quiet while informing staff that North Carolina had been cancelled.
It just isn't right how many projects have been pulled out from under the studio's feet. We need a Kickstarter sooner rather than later - it's the only sure way of never having to witness this again.