Undead Labs Becomes Employee-Owned After Xbox Separation
Undead Labs Becomes Employee-Owned After Xbox Separation
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This marks Undead Labs’ return to independent operation for the first time since 2018, according to Insider Gaming.
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Undead Labs said it retains control of State of Decay 3 following the separation from Xbox.
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The studio said it will provide further updates on State of Decay 3 at a later date, without specifying when additional information will be shared.
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One report said Undead Labs has secured a new publisher for State of Decay 3, though the publisher’s identity has not yet been disclosed.
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The studio’s move to independence had previously been announced as part of the first round of Xbox cuts earlier in the year.
Undead Labs has completed its separation from Xbox and is now operating as an independent, employee-owned studio. Insider Gaming reports this marks the developer's return to independence for the first time since 2018, after being acquired by Microsoft six years ago.
State of Decay 3 remains actively in development and is currently in alpha, with a closed beta planned by the end of 2026. IGN confirmed the game is still targeted for a 2027 release on Xbox, PC, PlayStation, and Xbox Game Pass, including a day-one Game Pass launch.
What Separation Means for State of Decay 3
Undead Labs retains full control of State of Decay 3 following the Xbox split. GamesIndustry.biz reports the studio has also secured a new publisher for the game, though the publisher's identity remains undisclosed. The developer said independence will let it focus more closely on its community and games.
The studio expressed gratitude for its years with Microsoft while emphasizing the benefits of standing alone. GosuGamers noted that Undead Labs is now focusing on making the best games possible and earning continued community support as a fully independent operation.
Why Undead Labs Left Xbox in 2024
The separation was announced earlier in 2024 as part of Xbox's first round of studio closures and restructuring. Microsoft made the decision to divest several studios as it shifted strategy. Bloody Disgusting confirmed that Undead Labs purchased itself back from Microsoft to regain independence.
This move reflects broader changes in the gaming industry. Many mid-sized studios are returning to independence or finding new publishers after major company restructurings. Undead Labs' buyback shows the studio had the resources and confidence to become self-owned.
State of Decay 3 Development Timeline Ahead
The game's alpha phase is well underway with closed beta testing planned for late 2026. IGN reports the 2027 release target remains firm across multiple platforms. The studio said it will share further updates on development at a later date without specifying when.
Players can expect State of Decay 3 on day one of Xbox Game Pass, securing the game a broad audience immediately at launch. The multi-platform release — spanning Xbox, PC, and PlayStation — positions Undead Labs to reach the widest possible player base as an independent studio.
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