Undead Labs has confirmed that it is becoming an independent studio again after buying itself back from Microsoft, ending nearly eight years under Xbox ownership.
The move is part of Microsoft's wider restructuring of its gaming business, which has also seen other studios separated from Xbox or reorganized under different publishing groups.
Despite the ownership change, State of Decay 3 will still launch on Game Pass on day one. The game is currently targeting a 2027 release and is also expected to arrive on PlayStation 5.
Undead Labs is buying itself back
Earlier restructuring announcements indicated that Undead Labs had been sold to an unnamed third party.
The studio has now clarified that the buyer is Undead Labs itself.
That means the developer is returning to independent ownership rather than being transferred to another publisher or parent company.
Studio head Philip Holt said independence should allow the team to work more closely with its community and focus on the games it wants to build.
The studio also acknowledged Microsoft's long involvement with the State of Decay franchise.
| Detail | Current status |
|---|---|
| Studio | Undead Labs |
| Ownership | Independent |
| Previous owner | Microsoft |
| Microsoft acquisition | 2018 |
| State of Decay 3 target | 2027 |
| Game Pass | Day one |
| PlayStation 5 version | Planned |
| New publisher | Not yet announced |
Undead Labs joins Compulsion Games and Double Fine among studios that have returned to independent status during Microsoft's broader gaming reset.
Microsoft and Undead Labs have worked together since the beginning
Undead Labs was not always owned by Microsoft, but the two companies have been closely connected for most of the studio's history.
The original State of Decay launched in 2013 and was initially released on Xbox 360 through Xbox Live Arcade.
The project was developed under the codename Class3 and was originally intended to establish the foundation for a larger MMO concept known internally as Class4.
That MMO never materialized in its original form.
Instead, the success of the first State of Decay led to a larger sequel with expanded cooperative features.
State of Decay 2 launched in 2018, and Microsoft acquired Undead Labs later that year as part of a larger expansion of Xbox Game Studios.
The studio has remained focused on the franchise since then.
State of Decay 3 still has ties to Xbox
The ownership change does not mean State of Decay 3 is leaving the Xbox ecosystem.
The game will still be available through Game Pass at launch.
That suggests Microsoft will retain some commercial relationship with the project even though it no longer owns the developer.
The publisher for State of Decay 3 has not yet been revealed.
A PlayStation 5 version is also planned, marking the first time the series will launch on Sony's current console platform.
The franchise was previously closely associated with Xbox.
Development continues toward a 2027 launch
Undead Labs is currently targeting 2027 for State of Decay 3.
More playtesting is planned in the coming months, and signups remain open for people interested in participating.
The game has spent several years in development, with Microsoft first announcing it in 2020.
Since then, information has emerged gradually about the game's larger scale and expanded systems.
Previous reports have suggested that the new installment is aiming for a more polished production than earlier entries and may significantly increase the size of the playable world.
Those details remain separate from the latest ownership announcement, but the studio's move to independence creates a new structure for completing and releasing the project.
Independence changes the studio, not the launch plan
Undead Labs' return to independence is one of the more notable changes to come out of Microsoft's current restructuring.
The studio now has greater control over its own operations while keeping an important distribution relationship with Xbox through Game Pass.
For players, the immediate plan for State of Decay 3 remains largely unchanged.
The game is still expected in 2027, Game Pass access remains planned from day one, and the project is expanding beyond its traditional Xbox audience with a PlayStation 5 release.
The biggest unanswered question is who will publish the game once development is complete.
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