Undead Labs has been acquired by its management team and regained independence after separating from Xbox. State of Decay 3 is now backed by an as-yet-unannounced publisher, with studio head Philip Holt stating that this allowed the company to complete the game without bringing in external investors.
In July 2026, Xbox announced plans to sell five studios, including Undead Labs. Undead Labs initially entered negotiations with potential new owners, but the deal ultimately fell through, leading to a management buyout instead.
Holt described the past three months as extremely difficult for the team, with employees fearing mass layoffs and worrying that State of Decay 3 might not be completed. Management subsequently provided weekly updates to all staff and arranged direct communications. Following independence, the company carried out layoffs to maintain a sustainable scale, though Holt declined to disclose specific numbers.
Undead Labs is also preparing to transition to an employee ownership structure, granting shares to all employees. Holt himself does not hold a majority stake but will continue to lead the company through shares with stronger voting rights.
State of Decay 3 is planned for release on PC, PS5, and Xbox Series X|S, and will still be available on Game Pass. No release date has been announced yet, and further details regarding the new publisher and the game's development progress remain to be disclosed.