At least one piece of positive news has emerged from Xbox’s second wave of restructuring.
State of Decay developer Undead Labs has announced its departure from Xbox, becoming an employee-owned game development studio and operating independently.
In Undead Labs’ blog post, the studio expressed its gratitude to Microsoft for being part of State of Decay’s history, first partnering with the studio to publish the original game before acquiring Undead Labs in 2018.
Undead Labs studio head Philip Holt celebrated the move to independence, stating:
“Independence brings us closer to our community and lets us focus on what matters most: making the best games we can and earning the continued support of the people who choose to spend their time with us. State of Decay exists because millions of players have made that choice over the years, and we’re dedicated to honoring their trust.”
As per Xbox’s announcement, “Undead Labs has now successfully transitioned on similar terms and, with a new publisher, will release State of Decay 3 day one on Game Pass.”
The departure of Undead Labs comes alongside Xbox’s wider overhaul. It began three months ago, with the Microsoft division cutting 3,200 employees. The second wave of restructuring, announced last night, involved a further 268 staff being laid off and several changes to the company’s studio structure.
While Undead Labs went independent, Rare and World’s Edge were transferred under Activision’s remit, Obsidian was placed under Bethesda’s leadership, and Ninja Theory was shut down, among other changes.
State of Decay 3 remains on track for 2027 release
Undead Labs also revealed a positive development update for State of Decay 3, its highly anticipated zombie survival game.
The studio confirmed that State of Decay 3 “remains actively underway” and is currently in alpha stage. The game remains on track to enter a closed beta before the end of 2026, ahead of its planned 2027 release on Xbox, PC and PlayStation.
Undead Labs promises to share more about its future plans at a later date.
