State of Decay Developer Goes Independent After Xbox Layoffs, PS5 Game Still on Track

Undead Labs, the Seattle-based developer behind State of Decay, has officially transitioned to independence following its separation from Xbox. The move comes as part of a broader shift the studio confirmed months earlier when it announced plans to exit the Xbox umbrella.

On the same day the independence was formalized, Undead Labs revealed it had undergone "significant" job losses. In a LinkedIn statement, the studio said: "Unfortunately, today we are also saying goodbye to a significant number of our colleagues. It's difficult to reach this moment knowing that not everyone who helped get us here gets to make the rest of the journey with us."

Unlike some studios caught in recent industry layoffs, Undead Labs appears to have the financial stability to continue operating independently. Studio head Philip Holt stated: "Independence brings us closer to our community and lets us focus on what matters most: making the best games we can and earning the continued support of the people who choose to spend their time with us."

Undead Labs became part of Microsoft's gaming division in 2018 after partnering with the company since 2011. Holt acknowledged the lengthy relationship, saying: "Microsoft has been part of the State of Decay story from the very beginning, and we're proud of everything we've accomplished together."

State of Decay 3 remains in active development despite the organizational changes. The game is currently in alpha and still targets a 2027 release on PlayStation 5. A closed beta test is scheduled before the end of 2026. The title was first announced over six years ago.