State of Decay 3 Developer Nearly Acquired by Splash Damage Before Deal Collapsed

Undead Labs, known for the beloved State of Decay series, was on the verge of being acquired by Splash Damage, the team behind Gears Tactics, as part of Xbox’s ongoing restructuring efforts. However, that acquisition ultimately fell through, aligning with recent insights about Undead Labs’ situation.

On Tuesday, the leadership at Undead Labs confirmed that the studio, which became part of Xbox in 2018, is still actively developing State of Decay 3 but has now transitioned to being employee-owned and independent from Microsoft. This shift wasn’t always the intended path. Reports indicate that Splash Damage, a UK developer known for titles like Brink and Enemy Territory, was in talks to acquire Undead Labs, with funding from their private equity backers, Emona Capital. This same group also supports Secret Mode, the publisher behind the upcoming Star Wars: Galactic Racer. Unfortunately, the details surrounding the deal’s collapse remain unclear.

After the acquisition attempt failed, Undead Labs’ leadership and team found a way to take charge of their future. They are now wrapping up development on State of Decay 3, which is currently without a publisher.

While this marks a positive turn for the studio, it’s worth noting that recent layoffs affected Undead Labs as they adjusted to their new independent status. A similar scenario unfolded at Double Fine, which has also returned to indie status. In contrast, former Xbox-owned studio Ninja Theory, which faced its own failed acquisition attempts, may not be as fortunate, as it is reportedly facing potential closure later this year.

These developments come amid a wave of layoffs and corporate changes at Xbox, following earlier workforce reductions and restructuring in July. More adjustments and layoffs are anticipated before the year concludes under the leadership of new head Asha Sharma.