[STEAM] State of Decay 3, Which Was at Xbox Games Showcase and Is Currently Running Playtests, Reportedly at Risk of Cancelation as Buyer Sought for Undead Labs

[Steam 0]

This is the hidden content, please

• Sign In
• or
• Sign Up

There is fresh concern for

This is the hidden content, please

• Sign In
• or
• Sign Up

and its developer Undead Labs this morning, after reports overnight suggested both are under threat of closure as part of impending layoffs at Xbox.

This is the hidden content, please

• Sign In
• or
• Sign Up

reported on work being done behind the scenes to find a buyer for Undead Labs, which is based in Seattle, Washington — a report that was backed up by

This is the hidden content, please

• Sign In
• or
• Sign Up

. If a buyer can't be found, the reports indicate,

This is the hidden content, please

• Sign In
• or
• Sign Up

may cancel State of Decay 3.

Undead Labs is one of a number of

This is the hidden content, please

• Sign In
• or
• Sign Up

-owned studios reportedly fighting to prevent a closure order. Psychonauts developer Double Fine, South of Midnight developer Compulsion, and Hellblade developer Ninja Theory are also said to be in talks with

This is the hidden content, please

• Sign In
• or
• Sign Up

over potentially buying themselves out. Hundreds of jobs are at risk either way, not just at these studios, but across

This is the hidden content, please

• Sign In
• or
• Sign Up

’s gaming business, which includes Bethesda and Activision Blizzard studios and publishing operations.

State of Decay 3, like Ninja Theory’s Senua, was at

This is the hidden content, please

• Sign In
• or
• Sign Up

’s Xbox Games Showcase earlier this month. According to

This is the hidden content, please

• Sign In
• or
• Sign Up

,

This is the hidden content, please

• Sign In
• or
• Sign Up

allegedly planned to close or spin off Ninja Theory when it revealed Senua at the showcase event, and it did so thinking that “the promise of a newly announced game would help draw investor interest in the studio.” Game File’s Stephen Totilo suggests Ninja Theory management may not have even been aware of

This is the hidden content, please

• Sign In
• or
• Sign Up

’s plan.

State of Decay 3’s Xbox Games Showcase announcement brought confirmation of a PlayStation 5 version and a release window in 2027, but there was no firm release window, disappointing some fans. This July marks six years since the third entry in the zombie survival franchise was announced, and while we are now seeing plenty of gameplay footage emerge from playtests (you can still put your name down to be added to the waiting list), State of Decay 3 will not be released this year. The latest reports, however, suggest it could never be released at all.

Concern for Xbox kicked off with Xbox CEO Asha Sharma’s “reset” memo, which most took as a signal that

This is the hidden content, please

• Sign In
• or
• Sign Up

planned big layoffs and studio closures.

This is the hidden content, please

• Sign In
• or
• Sign Up

published the memo just days after Xbox Games Showcase — which had gone down well with core Xbox fans. In it Sharma revealed that

This is the hidden content, please

• Sign In
• or
• Sign Up

's gaming business has a 3% accountability margin (assumed to mean profit margin), which is down year-on-year. "Excluding Activision Blizzard King, over the past five years, we have spent over $20 billion on ongoing investments in our content, platform, and hardware subsidy, but our annual revenue has declined nearly half a billion during that time. Going forward, this cannot continue," Sharma said.

This is the hidden content, please

• Sign In
• or
• Sign Up

"the studios most exposed are brilliant for prestige and rotten for the spreadsheet." Concern started to grow for the likes of Compulsion, Double Fine, and Ninja Theory, neither of which have seen significant commercial success in recent years.

Reports then emerged that

This is the hidden content, please

• Sign In
• or
• Sign Up

had started to take action.

This is the hidden content, please

• Sign In
• or
• Sign Up

revealed that Xbox Game Studios boss Craig Duncan had stepped down, and news of

This is the hidden content, please

• Sign In
• or
• Sign Up

. Bloomberg's Jason Schreier

This is the hidden content, please

• Sign In
• or
• Sign Up

. IGN has asked

This is the hidden content, please

• Sign In
• or
• Sign Up

for comment specifically on the studio closure reports but it is yet to respond.

Yesterday,

This is the hidden content, please

• Sign In
• or
• Sign Up

, hosting a press conference to say “we're done paying for executives' failures.” A

This is the hidden content, please

• Sign In
• or
• Sign Up

spokesperson told IGN it will continue to negotiate with the CWA to reach agreements across Xbox.

"We respect the right of our team members to make their voices heard," the spokesperson said. "We have a long track record of good faith partnership with labor organizations, as demonstrated by the several finalized bargaining agreements our teams have reached with the CWA and our labor principles. We are continuing to negotiate in good faith with the CWA to reach agreements across Xbox."

This is the hidden content, please

• Sign In
• or
• Sign Up

cut an eye-watering 9,000 staff in July 2025 in a company-wide round of layoffs that also hit gaming. A number of titles were canceled as part of those cuts, including Rare’s Everwild, and studios shut down, such as Perfect Dark developer The Initiative. Staff who remain at Xbox are now bracing themselves for a potential repeat situation just a year later.

A recent report claimed Sharma is now speeding up development on new The Elder Scrolls, Fallout, and Halo games as she prepares to hit the reset button. Details on the potential shakeup come from

This is the hidden content, please

• Sign In
• or
• Sign Up

(via

This is the hidden content, please

• Sign In
• or
• Sign Up

), whose sources indicated that

This is the hidden content, please

• Sign In
• or
• Sign Up

hadn't ruled out turning the Xbox brand into a wholly-owned subsidiary. It's said the move could result in Xbox being operated as a joint venture with other partners or even potentially sold.

Wesley is Director, News at IGN. Find him on

This is the hidden content, please

• Sign In
• or
• Sign Up

at @wyp100. You can reach Wesley at [email protected] or confidentially at *****@*****.tld.

This is the hidden content, please

• Sign In
• or
• Sign Up