Along with the announced cut of 3,200 employees at Xbox, a number of studios like State of Decay 3 creator Undead Labs have either split from the company or gone independent – which also means, in the case of the zombie survival threequel at least, Game Pass might be off the table.
Just yesterday, Asha Sharma revealed the Microsoft layoffs, noting that Xbox sees three to 10 times lower margins than "comparable platform and publishing businesses." This "significant restructure" of the company also means that several studios – one of which is Undead Labs – are officially moving under other brands or going indie, splitting from Xbox. The State of Decay 3 developer itself will see new management, although it's unclear who just yet.
Although we don't yet know who Undead Labs' new owner will be, part of the exit deal between the team and Xbox may mean State of Decay 3 won't have to launch on Game Pass.
As per a recent report from Game File, while the deal does call for the release of the game, as well as the continued funding required up to that point, it doesn't leave State of Decay 3 obligated to Xbox-controlling terms, like being available on Xbox Game Pass. That's certainly interesting.
It's especially eye-catching as State of Decay 3 was just showcased during June's Xbox Games Showcase 2026, where it finally got a 2027 release date – a date fans had waited six long years to hear about.
The supposed continued funding is always nice to read, but I'm admittedly left wondering what other implications this entire situation might have for the third State of Decay entry. It's difficult to tell.
As for the other companies that will no longer be operating under Xbox, there's Psychonauts dev Double Fine, South of Midnight creator Compulsion Games, Senua studio Ninja Theory, and Arkane – a team that is notably currently working on Marvel's Blade. Management at the latter is "beginning required consultation with its Works Council to review potential strategic options," so it's not yet clear exactly what's happening there.
Some of these, like the first two, are independent now. Meanwhile, Ninja Theory and Undead Labs are finding new homes to work within.
