Undead Labs says it has completed its separation from Xbox and is now operating as an independent, employee-owned game studio.
The developer announced the change on the State of Decay website, describing independence as a way to bring the team closer to the community and concentrate on making games that retain players' trust. Studio head Philip Holt also thanked Microsoft, noting that Xbox has been part of State of Decay's history from the beginning.
The ownership change does not cancel the studio's next game or its existing Xbox distribution plans. Undead Labs says State of Decay 3 is still targeted for release in 2027 on Xbox Series X|S, PC and PlayStation 5, and will still arrive on Xbox Game Pass on day one. The studio has also been expanding its testing program ahead of launch.
Undead Labs joined Microsoft in 2018, making the completed separation a reversal of nearly eight years as a first-party Xbox studio. Employee ownership gives the development team a direct stake in the newly independent company, although the announcement does not spell out the financial terms of the separation or how shares are distributed.
For players, the immediate practical point is continuity: State of Decay 3 remains in development, keeps its announced platforms and Game Pass commitment, while its maker moves outside Microsoft's studio structure.