Fresh reports have raised concerns about the future of Undead Labs, the studio developing State of Decay 3. According to reports, the Xbox-owned studio could close if Microsoft cannot find a buyer. The company has not confirmed the reports, but the news has drawn attention since State of Decay 3 is one of Xbox's upcoming first-party games.
So far, Microsoft has not made any official statement on the matter. As a result, the reported shutdown remains speculation.
Game Rant, citing industry reports, said Undead Labs may be at risk as Microsoft continues to review parts of its gaming business. One report claims the company is considering various options for the studio, including a possible sale. If that does not happen, the studio could reportedly be shut down.
At this point, there is no confirmation that any final decision has been made. Microsoft and Undead Labs have remained silent on the reports. Undead Labs joined Xbox Game Studios in 2018. Since then, the team has focused on developing the next chapter in the State of Decay series.
While there have been reports, there seems to be no sign that work on State of Decay 3 has been halted. Just earlier this month, Xbox revealed fresh gameplay during its showcase and announced that the game will be released in 2027.
The latest trailer showed improved graphics, a larger world, new survival features, and updated co-op gameplay. Xbox also said the game is already being playtested, suggesting development is moving forward. For now, the planned launch window has not changed.
The reports come at a time when several game studios are facing changes. Rising development costs and shifting business priorities have prompted many companies to reduce their teams, cancel projects, or reorganize their studios. Many developers across the industry have been affected over the past year, making players more concerned whenever reports of closures appear.
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Until either Microsoft or Undead Labs provides more information, there is uncertainty about what will happen next. Fans will be waiting for an official statement within the coming weeks. In any case, at the moment, State of Decay 3 is supposed to be released in 2027, and there hasn't been any official confirmation yet about its cancellation.