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The studio's official site and multiple outlets (The Verge, Bloomberg, Kotaku) confirm Undead Labs has completed its separation from Xbox to operate as an independent studio, with State of Decay 3 development continuing.

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Home/Tech/Undead Labs Becomes Independent Studio Once Again
VERIFIEDBy Xavier Rivera·Tuesday, September 22, 2026 at 11:47 AM EDT·1 min read

Undead Labs Becomes Independent Studio Once Again

Undead Labs has completed its separation from Xbox to operate independently for the first time since 2018. State of Decay 3 development remains active in alpha, targeting closed beta by year-end and a 2027 multiplatform release that includes Game Pass.

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Undead Labs Becomes Independent Studio Once Again
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TL;DRAI · 60 sec read

Undead Labs has split from Xbox and returns to independent operation for the first time since its 2018 acquisition. State of Decay 3 development remains in alpha with plans for a closed beta by the end of the year and a 2027 release on PC, PlayStation, Xbox and Game Pass.

Undead Labs has now completed its split from Xbox and will operate as an independent studio for the first time since its 2018 acquisition.

Undead Labs announces independence on its website. The studio revealed the separation on Tuesday. This marks the end of its ownership under Microsoft, which began in 2018.
Independence brings us closer to our community and lets us focus on what matters most: making the best games we can,

State of Decay 3 development continues unchanged. The game remains in alpha. Undead Labs reportedly plans to reach closed beta by the end of the year and still targets a 2027 release on PC, PlayStation, Xbox, and Xbox Game Pass.

Studio head Philip Holt addresses the move. "Independence brings us closer to our community and lets us focus on what matters most: making the best games we can," Holt said in a statement. He added that the studio remains "dedicated to honoring their trust" after years of player support.
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Holt thanks Microsoft for its support. The studio head expressed enormous gratitude for the long relationship, noting that Microsoft "has been part of the State of Decay story from the very beginning."
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Further details on State of Decay 3 are pending. The studio will share future plans at a later date. The move reportedly allows the team to prioritize community connection and game quality.
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