Fresh reports suggest Undead Labs, the studio behind State of Decay 3, could be among the developers affected by Microsoft’s anticipated Xbox layoffs. While Microsoft has not officially confirmed any studio closures, multiple reports indicate the company is preparing a major restructuring of its gaming business.
Earlier this month, Bloomberg reported that Xbox was planning significant job cuts as part of a broader organizational reset under Xbox president Asha Sharma. New reporting from GamesBeat now claims Undead Labs has joined Compulsion Games, Double Fine Productions, and Ninja Theory as studios that could reportedly face closure if buyers cannot be found.
State of Decay 3’s future remains uncertain
The reported situation is especially notable because Undead Labs recently showcased State of Decay 3 during the Xbox Games Showcase. The zombie survival title is currently targeting a 2027 release, and some players are already participating in early alpha testing.
Although development appears to be progressing, GamesBeat claims the project could be at risk if the studio is ultimately shut down. Neither Microsoft nor Undead Labs has commented publicly on the report.
According to GamesBeat, the restructuring may extend beyond individual studios, with divisions including Blizzard Entertainment and Bethesda Softworks also expected to experience workforce reductions.
Adding to the speculation, George Broussard, co-founder of 3D Realms, said on social media that he had seen a list of potential studio closures before the expected layoffs. However, he also cautioned readers to “treat as rumor pending official confirmation.”
At the time of writing, Microsoft has not announced any layoffs or studio closures. Until the company makes an official statement, reports about Undead Labs and other Xbox studios remain unconfirmed.
