Xbox has recently made some massive internal changes, laying off over 3000 of its employees and parting ways with 5 of its previously-acquired studios. While the circumstance of each team is different, State of Decay’s Undead Labs have now come out to comment on the matter, releasing an official statement.

Taking to the official State of Decay subreddit, Undead Labs released a statement on the recent events, writing:
“Today, Undead Labs begins a new Chapter. We're transitioning out of XBOX. And while we can't share all the details just yet, we can tell you this: State of Decay 3 is still coming. The team is working hard and our commitment to this community has never been stronger. More news soon. Survivors stick together.”

They concluded with: “We'll share more when there is more to share. Appreciate all the well-wishes and support. Ultimately, we are here because of you.”

For the uninitiated, as part of Microsoft’s recent Xbox shake-up, Undead Labs is set to be sold off. Details are currently light on the matter, but according to Xbox CEO Asha Sharma the studio has “entered terms to join new ownership with funding to complete and grow [State of Decay 3].”

What this means exactly is unknown, and based on Undead Labs’ own statement, don’t expect a full explanation any time soon. That being said, things at Undead Labs are likely to be rather tumultuous right now, and so time is needed in order to figure out exactly what’s next.

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KitGuru says: What do you think of all the new developments at Xbox? Are you glad to see that the studio isn't being shut down? Let us know down below.

For the past month or so, we’ve been hearing countless talk surrounding Microsoft and its plans for Xbox, with leaks and rumours suggesting that studios could be shut down, games might be cancelled and Xbox overall could be in a very different place. Finally, Microsoft has broken its silence, confirming that nearly 5000 jobs across the company will be cut, with the likes of Double Fine and Compulsion Games now going independent.

As obtained by the publication The Verge (paywalled), Xbox CEO Asha Sharma recently sent a memo to employees addressing all of the rumours and giving a concrete idea of what’s in store for Xbox, writing:

“We are beginning the most significant restructure in XBOX history. After careful consideration, I’ve made the difficult decision to reduce our team by approximately 3,200 throughout FY27. This will include approximately 1,600 role eliminations today.”

In terms of what will become of Xbox’s many studios, Sharma finally offered clarity, adding: “Compulsion Games and Double Fine Productions will return to management and transition to independent studios with their IP, catalog, and runway for their next games.”

Other studios are set to be impacted differently, with Sharma revealing that “Ninja Theory and Undead Labs have entered terms to join new ownership with funding to complete and grow Senua and State of Decay 3. In France, Arkane’s management is beginning required consultation with its Works Council to review potential strategic options.”

The full memo is rather lengthy, and covers all manner of topics from Xbox’s current business costs, the structure of the company, new appointees and more. Regardless, while this latest news is far from positive, it could have been even worse.

Hopefully Double Fine, Compulsion, Undead Labs, Ninja Theory and Arkane are all able to thrive under these new conditions.

Discuss on our Facebook page HERE.

KitGuru says: What do you think of this latest decision? Is it the best-case-scenario given the circumstances? Let us know down below.

The layoff hammer has finally fallen at Xbox, with CEO Asha Sharma herself announcing that the division will lose 3,200 employees through job cuts and four studio divestitures (plus a wildcard). The wildcard is Arkane Lyon, which the executive says has already begun the obligatory consultation with its Works Council to" review potential strategic options". This suggests every option is still on the table for the studio that made Dishonored and Deathloop: closure, going independent, or finding a buyer. The known quantities are Compulsion Games (Contrast, We Happy Few, South of Midnight) and Double Fine Productions (Psychonauts, Brutal Legend, Broken […]

Read full article at https://wccftech.com/xbox-reset-3200-layoffs-studio-shake-up/

Microsoft’s internal restructuring continues to raise concerns across Xbox’s first‑party studios. Earlier this month, reports indicated that Compulsion Games, Ninja Theory and Double Fine were all in negotiations to avoid closure. Now, a new report suggests that Undead Labs, the studio behind the State of Decay franchise, may also be on the chopping block.

As reported by GamesBeat, workers represented by the Communications Workers of America (CWA) have criticised Microsoft’s management and warned of pending layoffs affecting multiple Xbox teams. Within that report, Undead Labs is specifically named as one of the studios potentially at risk. This is particularly surprising given that Undead Labs only recently began releasing deep‑dive videos for State of Decay 3, which is currently planned for release in 2027.

If Undead Labs were to be shuttered, State of Decay 3 would join a growing list of Xbox projects facing uncertainty. It wouldn’t be the first game shown at this year’s Xbox Games Showcase to encounter trouble either. Ninja Theory also released a trailer for Senua, a new Hellblade project, but that trailer may have only been shown to attract investors.

This aligns with broader reporting that Microsoft is undergoing a major cost‑cutting phase across Xbox, reducing investment in projects deemed risky or unlikely to deliver strong returns. For now, Microsoft has not commented publicly on the status of Undead Labs or any of the studios reportedly in negotiations, but that is expected to change ahead of the company's next quarterly earnings call, scheduled for late July.

KitGuru Says: Undead Labs being added to the list is a surprising twist, especially with State of Decay 3 finally entering the spotlight.

Today, Undead Labs shared the first proper gameplay reveal of State of Decay 3 during the Xbox Games Showcase 2026. The studio presented the new installment as the next major evolution of their zombie-survival series, built to feel bigger, deeper, and more systemic than earlier games. The scale has been increased: larger maps, more player freedom, more settlement management, and a stronger emphasis on shared-world play. The game keeps the franchise's post-apocalyptic survival identity, but pushes it into a more connected sandbox where players build communities, explore dangerous regions, and make long-term decisions about where and how they survive. You are […]

Read full article at https://wccftech.com/state-of-decay-3-ps5-launch-2027-map-size/

It's been almost six years since the announcement of State of Decay 3, but the long wait might soon pay off. In April, developer Undead Labs opened registrations for a limited Alpha test that took place in May; now, with three days left before the Xbox Games Showcase 2026, Windows Central's Jez Corden shared that the game will not only be featured there but will also showcase its newfound triple-A feel. It's almost certain we'll see State of Decay 3 at the showcase too, given that it's already in private Alpha testing with a small subset of the community alongside […]

Read full article at https://wccftech.com/state-of-decay-3-aaa-xbox-showcase-2026/

State of Decay 3 was announced all the way back in 2020 with a cinematic teaser trailer and little else. While not an uncommon practice in the video games space, the team at Undead Labs have now revealed that when the game was first shown off work on the title had barely begun, claiming that all they had was a simple “word document.”

Years on from its initial reveal trailer, Undead Labs’ State of Decay 3 is finally beginning to materialise, with sign-ups for the game’s technical alpha officially going live. Alongside this, the studio spoke to YouTube channel Sunny Games, discussing the past 6 years worth of development.

Regarding the game’s initial 2020 reveal trailer, Undead Labs Studio head Philip Holt revealed just how early they were in development at the time, stating:

“So that trailer, there really wasn’t a game or game team when we were working on that trailer, like, it was so early…You know, the game was in a Word document…It was really the very beginning of [the] software.”

According to Holt, the trailer was created by known CGI studio Blur, confirming that “it was all pre-rendered,” representing “a concept, our thoughts at the time of what might be cool to explore in State of Decay 3.”

Unfortunately, it seems as though a number of these concepts won’t be making their way into the final product, with one of the trailer’s most notable aspects – the addition of zombie animals – being canned, with Holt stating:

“As we’ve had a chance to build a team and get going on the game, some of those elements I think are gonna persist in the game that we deliver and some of those things are just, like, we’re not doing zombie animals.”

As mentioned, releasing CG trailers far ahead of a game’s actual launch is nothing new, but in the case of State of Decay 3 is it now quite clear that the project was announced way too early.

KitGuru says: Are you excited for State of Decay 3? Is the removal of zombie animals a big deal to you? Let us know down below.

It has been nearly six years since State of Decay 3's reveal back in July 2020. The game was announced with a CG trailer, which players have learned to be distrustful of over the years, waiting instead to see what actual gameplay is like before really starting to get hyped up. We knew it was still very early in production at the time, but Undead Labs studio head Phillip Holt recently revealed just how early in development the game was at the time. In an interview with Sunny Games (via Kotaku), which arrived alongside Undead Labs announcing its alpha playtest […]

Read full article at https://wccftech.com/state-of-decay-3-was-a-word-document-at-2020-reveal-trailer-undead-labs-admits/

After years of total silence, Undead Labs has announced that State of Decay 3 still lives and will begin Alpha testing shortly. The news came via the official website with the following brief message to the community: You’ve all been super patient, and we hope you’re as excited as we are that the moment has arrived to start sharing State of Decay 3 with you. We want to be upfront that this first wave of playtests will be limited, but we plan on sharing insights and feedback with everyone as we go, and if you don’t get into this first […]

Read full article at https://wccftech.com/state-of-decay-3-alpha-test-begin-may/