It is a very difficult time for the video game industry. PlayStation is discontinuing physical discs, RAM prices have skyrocketed thanks to the increasing use of AI, and studios are at constant risk of closure regardless of whether their latest game was released to critical and commercial success. Unfortunately, the latter has held especially true during the past few weeks.
On June 7, video game players worldwide witnessed the 2026 Xbox Game Showcase, which featured new looks at highly anticipated titles such as Gears of War: E-Day, Fable, and State of Decay 3. Unfortunately, excitement for many of these projects didn't last long, as multiple reports surfaced claiming that Xbox would shut down studios and pull the plug on many games, regardless of whether they were close to seeing the light of day.
Worries started to arise, especially for State of Decay 3, as it was rumored that Xbox would shut down developer Undead Labs altogether. Fortunately, this highly anticipated zombie game will still see the light of day, even if it is under new leadership.
State of Decay 3 will still be released as Undead Labs joins a new parent company
Xbox CEO Asha Sharma released a statement confirming that approximately 1,600 employees had been, unfortunately, laid off, with plans to let go of another 1,600 by the start of the 2027 fiscal year. There's one silver lining, however: some studios weren't directly shut down but were instead given the chance to go independent or find new ownership. As a result, none of Xbox's first-party games or projects that were already announced will be canceled.
As revealed by Asha Sharma, "Ninja Theory and Undead Labs have entered terms to join new ownership with funding to complete and grow Senua and State of Decay 3." Much like its titular characters, the highly anticipated zombie game has refused to join the world of the dead.
Undead Labs' time under the Xbox umbrella has been pretty interesting, to say the least. The news that the studio would join Microsoft was officially broken back in June 2018. Just a month before, in May 2018, State of Decay 2 had been released. That means that Undead Labs never released a single title during its eight years as part of the Xbox ecosystem, and now that State of Decay 3 is just around the corner, the studio was officially let go. However, the story doesn't end there.
According to Game File, State of Decay 3 won't be required to fulfill any "Xbox-controlling terms" due to Undead Labs' new owner (which will reportedly be unveiled later this summer). As such, there's a high chance that the highly anticipated zombie game won't end up being released on Xbox Game Pass, as it was originally announced. However, only time will tell how much that could affect the title's player base.
To reassure fans that State of Decay 3 will come our way, Undead Labs has released the following statement on Reddit:
"Today, Undead Labs begins a new chapter. We’re transitioning out of Xbox, and while we can’t share all the details just yet, we can tell you this: State of Decay 3 is still coming. The team is working hard, and our commitment to this community has never been stronger. More news soon. Survivors stick together."
While fans don't know exactly when they will get to play State of Decay 3, the game was announced for a 2027 release window. With a bit of luck, this new restructuring won't affect those plans, and we won't have to wait long to team up with friends to fight the undead in a ruthless post-apocalyptic world.
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