Game developer Undead Labs announced it is cutting a large number of jobs right after separating from Microsoft Xbox to operate as an independent, employee-owned studio. The Seattle-based developer, best known for creating the zombie survival series State of Decay, confirmed the departures in a public statement on LinkedIn. While the studio did not reveal the exact headcount of workers affected, management stated that the upcoming release of State of Decay 3 will continue on schedule without delays.
Key Takeaways
- Undead Labs completed its separation from Microsoft Xbox and is now an employee-owned independent studio.
- The studio reduced its workforce directly after the buyout, citing difficulties in keeping everyone during the move.
- Undead Labs Studio Head Philip Holt confirmed that development on State of Decay 3 continues as planned.
- Microsoft previously divested other game teams, including Double Fine and Compulsion, under similar terms.
Studio Independence and Worker Reductions
Undead Labs began working with Microsoft in 2011 before Microsoft acquired the studio outright in 2018. Under the new agreement, the studio retains control over the State of Decay franchise, its back catalog, and existing assets.
In its statement, the studio explained that independence brought tough financial choices. “It is difficult to reach this moment knowing that not everyone who helped get us here gets to make the rest of the journey with us,” the studio wrote. Management praised the affected developers for their years building the game world and called on other gaming studios to hire them.
Rising operational costs across the United States have squeezed video game makers, pushing many independent outfits to trim payrolls. Similar job cuts took place earlier this year when Double Fine separated from Xbox to become independent. Rather than shutting down studios entirely, Microsoft has permitted several teams to separate with their intellectual property and baseline funding.
What This Means for State of Decay 3
Players awaiting State of Decay 3 had raised concerns about potential cancellations or long production halts. Philip Holt addressed those worries directly.
“State of Decay 3 remains in active development, and these changes will not impact the game’s launch,” Holt stated. He added that the team is working on schedule to deliver the experience the community expects.
The game is currently targeting a release in 2027, with plans for a closed beta phase. Undead Labs has also secured publishing support for the title to bring it to Xbox Game Pass and other platforms.
Frequently Asked Questions
Q1. Why did Undead Labs leave Xbox?
A1. Undead Labs separated from Microsoft Xbox to regain control of its operations as an independent, employee-owned game development studio.
Q2. How many workers lost their jobs at Undead Labs?
A2. The company did not disclose the specific number of workers affected, stating only that it had to say goodbye to a large group of colleagues.
Q3. Is State of Decay 3 canceled after the layoffs?
A3. No, State of Decay 3 is not canceled. Studio Head Philip Holt confirmed that production is active and progressing on schedule.
Q4. Will State of Decay 3 still come to Xbox Game Pass?
A4. Yes, the game is scheduled to launch on Xbox Game Pass through an external publishing agreement.
