Report Claims State of Decay 3 Developer Undead Labs Could Be Shut Down

State of Decay 3 is one of Microsoft’s most anticipated first-party games. Unfortunately, its developer might not be around much longer to see it through to release.

With rumors and reports circulating regarding the future of studios like Double Fine, Ninja Theory, and Compulsion Games, another studio can be added to that list.

Undead Labs Could Also Be Shut Down

According to a new report from Gamesbeat, State of Decay 3 developer Undead Labs is another Xbox studio that could be shut down. It’s said that Microsoft continues to look for a buyer for the 17-year-old studio. However, should one not be found, 110 jobs could be lost.

State of Decay 3 was announced during the Xbox Games Showcase in 2020. It took six years before its first gameplay trailer was revealed during the 2026 Xbox Games Showcase.

As of publishing, it’s scheduled to release on Xbox, PlayStation 5, and PC sometime in 2027.

Microsoft has not commented on any of the rumored layoffs. It’s also unknown exactly how large this latest round will be, though it’s believed that hundreds of people are set to be let go.

What do you think of Undead Labs potentially being closed by Xbox? Leave your thoughts in the comments below, or join the discussion in the official Insider Gaming Discord.

In other news, read about UFL developer Strikerz laying off over half of the company. And for even more Insider Gaming delivered directly to your inbox, sign up for our newsletter.