Xbox has been in a difficult position recently. In July, the company announced a round of massive layoffs, affecting 1,600 employees immediately, with another 1,600 to be laid off within the next fiscal year. As part of these measures, Xbox stated its intention to relinquish ownership of several well-known studios under its umbrella, including Double Fine, Ninja Theory, Compulsion Games, and Undead Labs. However, there is also good news: Undead Labs, the studio behind the zombie apocalypse survival game series State of Decay, seems to have smoothly navigated its split from Microsoft. The company announced that it has officially completed the independence process and is now operating as an independent, employee-owned studio.
The team also confirmed that development of State of Decay 3 is actively progressing; the game is currently in the Alpha testing phase. Closed beta testing is scheduled to begin before the end of 2026, with the full version launching on Xbox, Game Pass, PC, and PlayStation in 2027. Given recent events, it is somewhat surprising that the game will still launch on Game Pass, but it appears the relationship between the two companies has not completely broken down. The official press release stated that this transition "marks a new chapter in the more than 15-year relationship between Undead Labs and Microsoft." Microsoft was the publisher of the first State of Decay in 2013 and acquired Undead Labs in 2018.
Philip Holt, head of Undead Labs, said: "Independence allows us to be closer to our community and enables us to focus on what matters most: creating the highest quality games possible and continuing to support those who choose to spend their time with us. The State of Decay series exists because millions of players have made this choice over the years, and we are committed to living up to their trust."
The press release also mentioned that more details about the studio's future direction will be announced later, while registration for the State of Decay 3 test is still ongoing.