Undead Labs says it has completed its separation from Xbox and is now operating as an independent, employee-owned game development studio — with State of Decay 3 still on track, and with a painful cost. In a studio statement carried by Worthplaying and earlier coverage from The Outerhaven, studio head Philip Holt frames independence as a chance to stay closer to the community while finishing the next State of Decay.
SoD3: alpha now, closed beta before year-end, 2027 multiplat
Development of State of Decay 3 remains underway. The game is in alpha, with the team targeting a closed beta before the end of 2026. The published release target remains 2027 for Xbox Series, PC, and PlayStation 5, with day-one Game Pass via an unnamed new publisher. Players can sign up for future playtesting at playtest.stateofdecay.com. Additional details about the studio’s future plans are promised later.
Holt thanked Microsoft for a relationship that stretches more than fifteen years — from the original State of Decay partnership in 2013 through Microsoft’s 2018 acquisition — while stressing that independence lets the studio focus on making the best games it can.
Significant layoffs alongside the split
The same statement says the studio is saying goodbye to a significant number of colleagues. No exact headcount was published. Undead Labs calls those developers exceptionally talented, says their work remains part of the franchise and State of Decay 3, and asks hiring managers interested in talking to leavers to reach out at contact@undeadlabs.com. TweakTown amplified the layoff note alongside the independence announce.
Distinct from the Sep 22 Xbox reset package
Evening Sep 22 coverage of Microsoft’s studio reset mentioned Undead Labs only in passing as sold. This package is the material follow: employee ownership, concrete SoD3 alpha/closed-beta timing, the 2027 multiplat and Game Pass target under a publisher still unnamed, and the significant internal layoff wave — not a rehash of that earlier memo story.
