State of Decay 3 Developer Faces Uncertainty Amid Upcoming Xbox Layoffs

Earlier in June, reports surfaced that Xbox was gearing up for significant layoffs as part of new CEO Asha Sharma’s overhaul of Microsoft’s gaming division. Compulsion Games, Double Fine, and Ninja Theory were highlighted as studios potentially facing closure. Recent updates now suggest that Undead Labs, the team behind State of Decay, is also in jeopardy, which could lead to one of the largest layoffs in Xbox history.

On Monday, it was reported that Undead Labs, along with the previously mentioned studios, could be at risk if Microsoft fails to secure buyers for them. This could result in hundreds of employees losing their jobs, including 110 at Undead Labs alone.

Currently, Undead Labs is developing State of Decay 3, their upcoming zombie survival game. The game was showcased at a recent Xbox event, and players are already testing an alpha version. While State of Decay 3 is expected to launch in 2027, its future could be uncertain if Undead Labs is shut down.

The situation isn’t limited to just these studios. Reports indicate that Blizzard, Bethesda, and other Xbox divisions might also face layoffs, potentially marking this as “the biggest single cut series for Xbox,” according to insider sources.

George Broussard, co-founder of 3D Realms, mentioned on Monday evening that he received a list of Xbox studio closures ahead of the anticipated layoffs in July. He noted, “This will likely be the largest single layoff event in gaming history.” In a previous post, he suggested that layoffs could start on July 6, but advised treating this as a rumor until officially confirmed.

Despite the uncertainty, all indications point toward substantial layoffs at Xbox occurring in July, following the conclusion of Microsoft’s fiscal year. The full impact will only be clear after the layoffs take place, but the rumors of “the biggest single cut series for Xbox” appear to be quite serious.

It’s worth questioning whether Xbox should have acquired the studios it is now closing.