I suspect the reality is, having thought about it a bit more, that even with Microsoft money, Obsidian would need an awful lot of time and staffing up (and I think they have been staffing up, because I’ve seen a couple of ads from them, but still) before they could make something fully on that scale. Bethesda has 200 people on the FO/TES/Starfield team these days, and it still takes them like 5+ years to put one of those games out (indeed assuming Starfield is next and it started development when FO4 came out, it’s already been five years and from the way Bethesda are messaging on it, we’re still at least 18 months, if not two years or more out from Starfield).
But I think what is a bit more likely is something between a Ultima Underworld/Arx Fatalis and a full-on TES game in scale. The almost-screenshot at the end of the trailer is underground, and it may be that is the approach that they take, because even if they want to do TES, they need to build the team, and build expertise, and MS wants AAA RPGs for this generation, and I suspect for too not long after Xbox Series X (jesus lol that name) launch.
So right now I’d expect a sort of “open-world underground game”, or a game that is open world in a normal way, but a lot more constrained than a full-on TES. I suspect it’ll be UE4, as their last couple of games were (TOW and Grounded), but it could be UE5 - I see Hellblade 2 from the same presentation is UE5. If so I do think a “full-on” open world is unlikely, but we might well see something that feels pretty open. If it is UE4 I also doubt we’ll have Skyrim level of interactivity - the engine just isn’t designed for it the way Gamebyro is, but maybe they can do it, or maybe that’s easier in UE5 or something, be interesting to see.
If it’s very successful, which I think will “just” be a matter of having flash graphics and basically being fun, then I suspect they’ll immediately start work on a sequel. The sad thing is, if this comes out before Starfield (which seems possible), or even around the same time (hopefully not), then I would unsurprised if they had a sequel out, with more opener world, than before TES6.
That is a lot of theory I have right there and not a lot of facts, note!