Update: Undead Labs Studio Head, Philip Holt, provided the following statement to IGN, confirming that the game's release won't suffer any setbacks as a result of these layoffs.
"State of Decay 3 remains in active development, and these changes will not impact the game's launch," said Holt. "The team is continuing its work on schedule, and we remain committed to delivering the experience our community has been waiting for. We're grateful to everyone who has contributed to the game."
The original story continues below.
State of Decay 3 developer Undead Labs has confirmed that it underwent "significant" layoffs following its independence from Xbox.
The studio announced on LinkedIn that it is parting ways with a "significant" number of staff. This follows the developer's separation from Xbox, which comes as a part of Microsoft's big reset for the brand that was made public earlier this summer.
"Unfortunately, today we are also saying goodbye to a significant number of our colleagues," reads the studio's announcement. "It's difficult to reach this moment knowing that not everyone who helped get us here gets to make the rest of the journey with us.
"They are exceptionally talented developers who have poured years into the State of Decay franchise: solving hard problems, looking after one another, and helping shape both this game and this studio. Their work remains part of Undead Labs and part of State of Decay 3, regardless of where their careers take them next."
IGN has reached out for clarity on how many staff members were laid off and if this will impact the release or development of State of Decay 3. It's unclear if other companies considered buying Undead Labs, though it wouldn't be surprising; while most of the Xbox teams that were at risk of being shut down managed to go independent, Ninja Theory is facing closure after negotiations fell through with different buyers.
State of Decay 3 remains in development with a 2027 release, and the studio has expressed enthusiasm over its future as an independent studio.
“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,” said Philip Holt, Studio Head of Undead Labs. “State of Decay exists because millions of players have made that choice over the years, and we’re dedicated to honoring their trust.”