Rumor: Undead Labs Could Be Shut Down as Microsoft Seeks Buyer for State of Decay 3 Studio
A GamesBeat report claims Undead Labs, the Xbox game developer behind State of Decay 3, could be closed if a buyer isn’t found. The 17-year-old studio reportedly faces layoffs of up to about 110 employees, with Microsoft reportedly seeking a buyer to keep the studio alive. State of Decay 3 was announced in 2020 and, after a lengthy wait, had its first gameplay trailer shown at the 2026 Xbox Games Showcase; it’s slated for a 2027 release on Xbox, PlayStation 5, and PC. Microsoft has not commented on the rumors, which come amid wider industry chatter about studio layoffs.
