Undead Labs is the latest studio to be named as part of potential Xbox closures, weeks after it showed State of Decay 3 during the Xbox Games Showcase.
Earlier this month, Xbox CEO Asha Sharma revealed that Microsoft was in the process of ‘resetting’ its games business, which media reports indicated could result in significant job losses and the closure of multiple studios.
Initially, the developers at risk of being shut down were named by Bloomberg, and corroborated by VGC’s own sources, as Compulsion Games, Double Fine, and Ninja Theory.
The studios were said to have entered negotiations to go independent in an attempt to avoid being closed, sources said.
Now, a fourth studio at risk has been named by Games Beat as State of Decay 3 developer Undead Labs. According to the publication, the Seattle-based studio is also searching for a buyer, with around 110 jobs at stake if it fails to do so.
Other divisions, such as Blizzard, Bethesda, and others, are expected to be hit with percentage layoffs, according to Games Beat. This is likely ‘the biggest single cut series for Xbox,’ according to its sources.
Undead Labs was acquired by Microsoft in 2018, and in the eight years since, it’s yet to release a new title under Microsoft.
State of Decay 3 was announced back in 2020, with the developer later admitting that its reveal trailer was purely designed to announce that the game was coming, because at that point the game was just “a Word document”.
The game finally reappeared at the Xbox Game Showcase this month, where it was announced for a 2027 release on PS5, Xbox Series consoles, and PC. That reportedly makes Undead Labs the second studio to have a reveal in this month’s showcase that’s up for closure, alongside Senua studio Ninja Theory.
