Undead Labs, developer of State of Decay 3, is leaving Xbox ownership as part of a major reorganization of Microsoft’s gaming business. The studio, which Microsoft bought in 2018, is undergoing a change of ownership while still working on the long-awaited zombie survival game. Importantly for fans, Microsoft has said that funding is available to finish and grow State of Decay 3, so the project hasn’t been canceled due to the studio’s exit.
Undead Labs is breaking up with Xbox ownership
Undead Labs is one of several studios affected by Xbox’s recent reorganization. Microsoft is also reshaping its relationships with Double Fine, Compulsion Games and Ninja Theory as the company trims costs and reorganises its gaming division. While some are returning to independent operation, Undead Labs is in negotiations to be sold to new ownership.
The future owner of the studio has not yet been publicly confirmed. What has been confirmed is that the transition includes funding that is intended to support the completion and continued development of State of Decay 3. That information is important as some previous reports had expressed fears the studio could be shuttered or the game could be canceled.
State of Decay 3 is still in development
For fans concerned about the future of the game, the most important answer has been this: State of Decay 3 is still in development. Microsoft said publicly disclosed first-party projects were not being canceled as part of the restructuring, and the deal with Undead Labs specifically supports the continuation of the next State of Decay game.
Now the title is aiming for a 2027 release window. Undead Labs has also been conducting player testing, with an Alpha version already being played and plans to expand testing through additional Alpha and Beta opportunities. The game is being developed with Unreal Engine 5 and will be a larger and more advanced survival sandbox than its predecessors.
Fans still care about platform plans
Before the ownership change, State of Decay 3 was announced for Xbox Series X|S, PC, cloud gaming, Steam and PlayStation 5, with Xbox Play Anywhere and Game Pass support in the works, as well. The reorganization raises questions about the potential impact of the new ownership structure on long-term publishing relationships and platform support.
Right now, the game is still scheduled for release and there has been no mention of dropping any of the platforms previously confirmed. However Undead Labs is moving out from under Microsoft ownership so more of the business details might become clearer once the studio’s new ownership structure is formally announced.
