Undead Labs Splits From Microsoft, State of Decay 3 Still on Track

Undead Labs, the developer behind the zombie survival series State of Decay, has completed its separation from Microsoft and now operates as an employee-owned independent studio. The move marks a new chapter after more than 15 years of collaboration, while ensuring the State of Decay 3 project continues.

The decision comes amid a wave of mass layoffs at Xbox. Last July, Microsoft announced the immediate cut of 1,600 employees and plans to reduce another 1,600 in the following fiscal year. As part of the restructuring, Xbox spun off several prominent studios such as Double Fine, Ninja Theory, Compulsion Games, and Undead Labs.

Even so, Undead Labs managed to get through the transition. The studio not only survived but also cemented its status as an independent entity. In its official announcement, it confirmed that State of Decay 3 is still in alpha development. The studio is targeting a closed beta before the end of 2026, with a full launch in 2027 for Xbox, Game Pass, PC, and PlayStation.

Undead Labs studio head Philip Holt said the independence brings them closer to the community and allows them to focus on developing the best game. "Independence brings us closer to the community and allows us to focus on what matters most: making the best game and earning sustained support from the people who choose to spend their time with us," he said. He also reaffirmed the commitment to maintaining the trust of millions of players who have supported the series for years.

On the other hand, the fate of other studios involved in Xbox's "big reset" remains unclear. Double Fine and Compulsion Games managed to separate last month, taking with them intellectual property rights, game catalogs, and funding. Meanwhile, Ninja Theory, the developer behind Hellblade: Senua's Sacrifice, is still in an uncertain position. Microsoft said two acquisition deals fell through and is now consulting with employees about a possible studio closure. Xbox is also exploring a divestment of Arkane Studios, the developer of Dishonored, Prey, and Deathloop.

The restructuring also includes a reshuffle of the remaining studios. Microsoft announced that Halo development will fall under Activision, Obsidian moves under Bethesda, and the Forza and Fable teams are being merged. The move is part of the company's effort to streamline operations and focus on key franchises.

For the global game industry, Undead Labs' decision signals that mid-sized studios can survive amid massive consolidation. However, challenges remain: as an independent studio, it must be financially and creatively self-reliant. The success of State of Decay 3 will determine the direction of its future.

In Indonesia, the console and PC game market continues to grow, with State of Decay having a solid fan base. Undead Labs' independence could open up opportunities for more flexible collaboration or distribution in Southeast Asia. Fans in the country hope the game remains accessible through existing platforms, including Game Pass, which is popular among Indonesian gamers.

Going forward, the question is whether Undead Labs can maintain quality and its release schedule without the backing of a giant like Microsoft. Meanwhile, the future of Ninja Theory and Arkane Studios remains a big question mark in the ever-changing game industry landscape.