State Of Decay 3 Was Announced Early To Keep Undead Labs On Microsoft’s Radar

After leaving the Xbox Game Studios portfolio, State of Decay 3 developer Undead Labs is now an independent, employee-owned studio. The developer had previously announced State of Decay 3 all the way back in 2020--partly to keep the project and the studio on Microsoft's radar--as the company embarked on an acquisition spree. Now one of several departures from Microsoft's gaming division following the bloody " Xbox reset " that has seen scores of jobs slashed throughout 2026, Undead Labs also had to cut staff as it entered a new era. But was there any behind-the-scenes drama that led to its exit from Xbox?

Speaking to The Game Business, studio boss Philip Holt said that ultimately, nothing went wrong. It was more a case of reading the room and making a proposal to Microsoft that the company accepted. "It was an accelerated period of time for Microsoft's divestiture," Holt explained. "We had a lot of interest. …