State of Decay studio Undead Labs goes independent and worker-owned as it leaves Xbox, laying off a significant number of staff

State of Decay developer Undead Labs has left Microsoft to become an independent, worker-owned studio amid Xbox's latest round of cuts, but said on LinkedIn it is also laying off a significant number of colleagues. Microsoft said this summer it had found a buyer for the studio without naming them. State of Decay 3 is still in development, targeting a closed beta before the end of the year and a 2027 release, and remains a Game Pass title with a new unnamed publisher, coming to Xbox, PC and PlayStation.