Undead Labs has separated from Xbox and is now an independent, employee-owned developer, and State of Decay 3 is still in development, the studio said in a blog post on September 22. IGN reported the announcement the same day.
State of Decay 3 is currently in alpha, according to the post, with a closed beta planned before the end of 2026. The game is scheduled to launch in 2027 on Xbox, Game Pass, PC and PlayStation.
What the studio said
Independence brings us closer to our community and lets us focus on what matters most: making the best games we can and earning the continued support of the people who choose to spend their time with us. State of Decay exists because millions of players have made that choice over the years, and we're dedicated to honoring their trust.
Holt also thanked Microsoft, saying the studio was enormously grateful for its years as part of Xbox and for what that relationship made possible, and that Microsoft had been part of the State of Decay story from the beginning.
IGN reported that players have largely welcomed the announcement, with much of the reaction on Reddit focused on the employee-owned structure and on the game remaining on Game Pass despite the split.
Part of a wider Xbox restructuring
The separation is one piece of the restructuring Xbox began this summer. IGN reported on the same day that Call of Duty developer Activision is taking over development of Halo, and that Rare has also moved under Activision.
Xbox has divested several studios over the past few months. Among the most prominent was Psychonauts developer Double Fine, which IGN reported has continued operating since the split.
