Undead Labs, the developer behind the popular State of Decay series, was nearly acquired by Splash Damage, the studio behind Gears Tactics. This was part of Xbox's ongoing corporate "restructuring" plan. However, according to the latest reports, the deal ultimately fell through, which aligns with information Kotaku has obtained regarding Undead Labs.
On Tuesday, Undead Labs management announced that the studio, which was acquired by Xbox in 2018, is still developing State of Decay 3 but has now completely separated from Microsoft to become an independent, employee-owned studio. However, this was not the original plan. According to the gaming industry media outlet GamesIndustry.biz, UK developer Splash Damage (known for Brink and Enemy Territory: Quake Wars) had been advancing processes to acquire Undead Labs. The deal was to be funded by Emona Capital, the private equity investor behind Splash Damage, which also funds publisher Secret Mode, the publisher of the upcoming Star Wars: Galactic Racing. For unknown reasons, the deal ultimately collapsed.
Media outlets have verified the authenticity of the above information through informed sources.
After the deal collapsed, Undead Labs' management and employees were able to take control of the studio's future development. The studio is currently finalizing the development of State of Decay 3, though the game's publisher has not yet been announced.
This marks a relatively positive outcome for the studio. However, during its transition to full independence, Undead Labs recently underwent a round of layoffs. Double Fine, which recently regained its independence, experienced a similar situation. Meanwhile, Ninja Theory, another former Xbox studio that had acquisition interest but saw the deal fall through, wasn't so lucky—the studio may begin shutdown procedures later this year.
These changes come in the wake of recent layoffs and corporate restructuring at Xbox, which already saw a round of layoffs and business adjustments in July. Under the leadership of new head Asha Sharma, Xbox is expected to implement further business adjustments and layoffs before the end of the year.