No, the news is not about any upcoming movie. It's about a Fallout movie that was being planned by Interplay just after the release of the original Fallout. In 1998, Interplay formed a division called Interplay Films, which was to develop some of the company’s video game titles into movies. A Fallout movie script was to be written by Brent V. Friedman. Several studios were interested in the concept, but before a deal could be consummated, Interplay Films was disbanded around 2000 and the movie was canceled.
A full movie script was never written, but writer Brent Friedman managed to find an early 15-page film treatment containing a full summary of the story on an old floppy, and was kind enough to send it to me. You can read the whole thing in this wiki article or download the PDF here. Here's a short excerpt:
The treatment was written in early 1998, before the release of Fallout 2. The released version is the second revision. A third version, with some additions and refinements also existed, but is yet to be found. This isn't the definitive version (most of the character names are placeholders, for example) but it's still a decent overview of the story macro.
It was surprisingly fun to read it after all these years (it was written around 1998 when Fallout 2 was released). There are some things I would definitely change (obviously, there are many outdated references, etc.) but there are also scenes and aspects of this story which I still love.”— Brent V. Friedman
The movie was not a faithful adaptation of the game's plot, and was never intended to be one, although the main story was loosely based on that of the original game. Some of the elements of the Fallout universe that many players can't imagine a Fallout title without, like ghouls, Brotherhood of Steel, deathclaws or power armor, were not included, although it's understandable given that e.g. the BoS is not as essential to the plot of the original game as to the later ones. The only characters from the original game, aside from the Vault Dweller himself (although here we have a party three vault dwellers - aside from the main Hero, there's the Female Officer, Techy and Scholar), are the Overseer, the Master and Dekker - the movie was to focus on Vault 13, the search for the water chip and the super mutant threat, and most other parts of the game did not make the cut. New characters and threads include Max (based on Mad Max), the hero's Intended and his relationship with his father (which may sound familiar to fans of Fallout 3).
As for the rest of the story, see for yourself and tell us what you think!