Microsoft is reportedly considering the closure of Undead Labs, the studio behind the State of Decay series, as part of a broader effort to "reset" the Xbox brand. The news comes from GamesBeat, which also lists Double Fine, Compulsion, and Ninja Theory as other Microsoft-owned studios that could be shut down.
Undead Labs is currently developing State of Decay 3, a survival shooter and management simulation game that was featured in the recent Xbox Showcase. The report suggests that if buyers are not found for these studios, hundreds of jobs could be lost. Specifically, Undead Labs could see approximately 110 positions eliminated. In some cases, studios might regain their independence by buying themselves out from Xbox.
This potential closure is particularly notable as it places Undead Labs in a similar situation to Ninja Theory, whose game Senua's Saga: Hellblade II is also set for release next year. Reports indicate that layoffs and studio closures across the Xbox division are anticipated to begin in early July, following the end of Microsoft's financial quarter. Some departures have already occurred, with at least a dozen employees from Compulsion Games recently announcing their exit.
Members of the affected studios represented by the Communications Workers of America (CWA) have publicly voiced their opposition to the impending job losses. The union, which now represents over 3,500 Microsoft employees, stated that these workers "will not be traded as disposable."
In an effort to improve profitability, new CEO Asha Sharma's strategic 'reset' plan is expected to encompass significant layoffs and studio closures throughout the Xbox division. Microsoft has not yet officially commented on these reports. The increased release of gameplay footage for State of Decay 3 in recent weeks may be an effort to showcase the game's progress following testing sessions opened to content creators.