From the outside looking in, it would appear that Undead Labs is a victim of mismanagement. The team was acquired by Xbox Game Studios in 2018, just weeks after the release of State of Decay 2. A sequel is set to land in 2027 after navigating a turbulent trajectory – revealed before it was ready for public consumption, development stalling during pre-production, challenges in shifting to Unreal Engine 5. The survival shooter finally opened its doors to public alpha testing earlier this spring.
Undead Labs didn't contribute any new games to the ecosystem in eight years. That's an irrefutable fact, which may speak to why Xbox just sold the studio as part of an internal reset. Although that doesn't mean the team hasn't been busy.
State of Decay 2 was a quiet success – amassing 10+ million lifetime players by its fourth anniversary. Undead supported this community with an expansion, multiple updates, new features, and years of refinements. Given how starved PS5 is for new co-op titles, it's shocking SoD2 wasn't part of the first wave of Xbox games to abandon platform-exclusivity. Another error from the prior Xbox administration.
Xbox has historically done a poor job of drawing attention to collaborations across XGS. The Coalition is an Unreal Engine 5 center of excellence. Other teams have made use of Ninja Theory's high-end motion capture studio. Rare provided the networking know-how for Double Fine's Kiln. Blizzard lent its cinematics expertise to Playground for Fable. Obsidian's proprietary dialogue editor is used by various in-development RPGs at Xbox. There's countless other examples.
Just like State of Decay helping bring Grounded to life. Operating with a small budget, Obsidian sought a novel way to achieve its co-op ambitions. And so it turned to Undead Labs, who had developed a system to store world-data as a shareable save file in the cloud. It's what allows multiple players to independently drop into the same persistent world without requiring a community's host to be online.
"It's almost like a pseudo-dedicated server space," Marcus Morgan, Obsidian's VP of operations, told me last year. "It's effectively just a shared cloud save, but you don't need any of the dedicated server infrastructure – or the cost that goes with it."
"The intention behind that was, because we were a small team (there were only like 20 people working on it, and the cost of making it was relatively small) this was a good way to satisfy player's needs," he says, adding: "That stemmed from a collaboration between us and Undead Labs. I have to give a big shout out to that team. They built this tech initially, and then we built upon it."
This 'Shared Save' technology helped Obsidian scale quickly to build more vibrant and collaborative backyards. Eventually, Undead received an expanded 'Shared World' system in return – allowing State of Decay 3 to support far larger communities, no longer constrained by the co-op tethers that plagued its predecessor. It'll be interesting to see whether the tech evolves again in the future.
Still, it's an interesting example of the sort of value that Undead Labs brought to Xbox, and the way the XGS group has been able to leverage wider expertise to bring concepts to life. Eight years without releasing a new game clearly isn't enough for this next era of Xbox, but the legacy of Undead Labs and State of Decay will live on through Grounded 2's ever-expanding Brookhollow Park forever.
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State of Decay 3 is due to release on PC, PS5, and Xbox Series X in 2027
