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Undead Labs lays off staff as it splits from Microsoft to become independent

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Undead Labs lays off staff as it splits from Microsoft to become independent. State of Decay 3 remains on track for 2027 release despite workforce cuts.

Undead Labs lays off staff as it splits from Microsoft to become independent
GAMES

The future of the State of Decay franchise hangs in the balance as Undead Labs undergoes a major restructuring. The studio is transitioning from a Microsoft subsidiary to an independent, employee-owned entity. This shift comes with a heavy immediate cost, as the studio has laid off a significant number of its workforce. Players and industry observers should watch closely to see how this independence impacts the development of the upcoming sequel.

Undead Labs studio logo
Undead Labs is transitioning to an independent, employee-owned entity.

State of Decay 3 remains on track for 2027 release despite workforce cuts

Undead Labs has confirmed the departure of many staff members in a statement posted on LinkedIn. The studio described the move as a necessary step in its journey toward independence. We noted the emotional weight of the announcement, acknowledging that not everyone who helped build the studio will continue on that path. This internal shakeup marks the end of an era for the team under its former corporate umbrella.

The studio's flagship title, State of Decay 3, remains on track for a 2027 release. Undead Labs has already secured a new publisher for the game, ensuring it moves forward despite the layoffs. The title is still scheduled to launch on Xbox Game Pass, maintaining the franchise's traditional distribution model. This continuity suggests that the core development work has survived the transition, even as the team shrinks.

State of Decay 2 previously achieved significant commercial success, reaching over 10 million players. That established fanbase provides a solid foundation for the next installment. The studio's split from Microsoft was part of a broader divestment strategy rather than a shutdown of the studio itself. This distinction allows Undead Labs to retain its creative identity while operating under a new ownership structure.

Undead Labs is now fully independent and employee-owned. The studio has laid off a significant number of employees during this transition. State of Decay 3 is scheduled for 2027 release with a new publisher. The game will launch on Xbox Game Pass. The previous title reached over 10 million players.

Source: TweakTown

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