Undead Labs, the developer behind the State of Decay series, has announced its separation from Xbox and is now operating as an independent, employee-owned studio. Despite this shift, development of State of Decay 3 is continuing, with the game currently in its alpha phase and aiming for a closed beta by the end of the year.
However, the studio's announcement was accompanied by news of significant layoffs. Undead Labs stated that it is parting ways with a substantial number of its employees, acknowledging the difficulty of such decisions and the fact that not everyone will continue on the journey with the studio.
Previously, State of Decay 3 had been a subject of discussion regarding its development status. A report indicated that at the time of its 2020 reveal trailer, the game was conceptualized in a document rather than having a full development team in place. The game resurfaced in 2024 with a new trailer and later announced alpha tests in April. The studio's transition away from Microsoft was part of a larger restructuring.
The move to employee ownership marks a new chapter for Undead Labs, though it follows a pattern seen with other studios, such as Double Fine, where independence has also been preceded by layoffs.