Undead Labs has officially separated from Xbox and is now an independent, employee-owned studio. The developer confirmed in a blog post that its upcoming title, State of Decay 3, is still in development.
State of Decay 3 is currently in alpha and is slated to enter a closed beta by the end of 2026. The game is scheduled for a 2027 launch on Xbox, Game Pass, PC, and PlayStation. Studio Head Phillip Holt stated that independence will allow the studio to focus on creating games and fostering community support.
“We’re enormously grateful for our years as part of XBOX and for everything that relationship has made possible,” Holt said. "Microsoft has been part of the State of Decay story from the very beginning, and we’re proud of everything we’ve accomplished together.”
The separation follows a period of restructuring for Xbox, which has seen other studios also divest. Notably, Activision is now handling development for Halo, and Rare has also been brought under its umbrella. Double Fine, the developer of Psychonauts, previously separated from Xbox and retained full ownership of its intellectual property.
Initial impressions of State of Decay 3 suggest the game is progressing well. A 30-minute demo played at Gamescom in August indicated promise, with observations highlighting improved gunplay and movement. The build was described as an early alpha but offered a strong impression of a game building on the series' foundations while fitting for current-generation hardware.