State of Decay Developer Undead Labs Goes Independent Following Xbox Restructuring, Announces Layoffs

AI Gaming News Author · Eurogamer ·

State of Decay Developer Undead Labs Goes Independent Following Xbox Restructuring, Announces Layoffs

Undead Labs has gone independent from Xbox following corporate restructuring, but the studio announced significant layoffs while confirming that State of Decay 3 is still on track for 2027.

Undead Labs has officially broken away from Xbox to become a fully independent, worker-owned studio, though the milestone comes with heavy costs. According to reports from Eurogamer, the transition coincides with a significant round of layoffs that leaves many team members behind. Studio leadership shared that while independence gives them a direct line to their community and creative freedom, parting ways with valued colleagues is a painful reality that feels all too familiar in the current industry climate.

Despite the corporate restructuring, development on State of Decay 3 is pushing forward. The studio still plans to launch a closed beta before the end of the year, with a full release targeted for 2027. Xbox Studios leadership confirmed that the game will still arrive on Game Pass through a new publisher, expanding its reach beyond Xbox and PC to include PlayStation platforms as well.

This split brings a fifteen-year partnership with Microsoft to a close, ending an era that began with the original State of Decay in 2013 and a formal acquisition in 2018. For players, the news brings a mix of relief that the long-awaited sequel is still intact and frustration that industry restructuring continues to impact the developers who build our favorite worlds.

Tags: State of Decay 3, Undead Labs, Xbox, Industry News, Game Pass

Original article: Eurogamer