Rumor: Undead Labs Was Targeted For Acquisition By Splash Damage Before Deal Collapsed

New details indicate that Undead Labs, the developer behind State of Decay 3, was previously in line to be acquired by UK developer Splash Damage. According to Christopher Dring of The Game Business, the deal ultimately failed to complete. Splash Damage is known for titles such as Gears Tactics and is funded by Emona Capital.

This information emerges as Xbox continues its business reorganization. The company previously announced plans to divest from four studios, returning Compulsion Games, Undead Labs, and Double Fine Productions to independence, while placing Ninja Theory under a consultation period. According to Dring, Ninja Theory also attracted two potential buyers, but both prospective deals fell through because the team's overall costs were too high.

Xbox's broader restructuring efforts follow poor business health resulting from over-extended acquisitions. Division CEO Asha Sharma noted that many of those previous investments did not pay off. The reorganization has involved substantial job cuts and major internal shifts. These changes include transferring the Halo franchise from Halo Studios to Activision, which will also manage World's Edge and Rare. Meanwhile, Obsidian Entertainment was brought under Bethesda, and Turn 10 Studios is being merged with Playground Games.

As for Ninja Theory, the studio is not facing an immediate shutdown due to UK labor laws. It is currently undergoing a six-week consultation period while Xbox continues to pursue an acquisition deal. During this time, the team continues development on a new project described as a significant step up from Hellblade 2.