Undead Labs, known for the *State of Decay* series, was recently affected by a major reorganization of Xbox development studios, with reports that it would transition from being an Xbox-affiliated studio to an independent studio. On September 23, 2026, the company revealed via its LinkedIn account that it had “said goodbye to many colleagues,” confirming that it had carried out numerous layoffs.
Development of ‘State of Decay 3’ Continues, but Many Employees Laid Off
In the statement released today, the company acknowledged that “today is a day to say goodbye to many of our colleagues,” adding, “While such announcements have become all too common across the industry, we deeply regret that we have now joined that list.” This suggests that the decision to announce the layoffs was a painful one.
Regarding the contributions of those being laid off, the statement notes, “No matter what path their careers take from here, the fruits of their labor will remain as part of Undead Labs and as part of ‘State of Decay 3.’” This suggests that development of “State of Decay 3,” which the company is currently working on, will continue.
*State of Decay 3* is scheduled for release on PC (Steam/XBOX),PS5, andXBOX Series X|S. There are no changes to the plan for the game to be available on Game Pass from day one.
