State Of Decay 3 Could Be Cancelled In Xbox's Upcoming Layoffs

State of Decay 3 developer Undead Labs is reportedly one of the Xbox-owned studios under threat in the company's upcoming "massive" layoffs, which will see several studios shuttered or spun off from Microsoft.

According to a report from Gamesbeat, corroborated by Windows Central, Xbox is currently looking for a buyer for Undead Labs. If it is unable to do so, State of Decay 3 may be cancelled and the studio closed.

Undead Labs isn't the only studio in this position, with Psychonauts developer Double Fine, South of Midnight developer Compulsion and Hellblade developer Ninja Theory also in similar positions where they either need to go independent or be successfully sold to another parent company by Xbox.

State Of Decay 3 Could Be In Trouble

State of Decay 3 is set to release in 2027, and, like an increasing number of games from Xbox-owned studios, is also set to release on PlayStation 5. You may be led to believe that the game's appearance at a recent Xbox Showcase means Undead Labs is safe, but we already know via Game File that Xbox revealed Ninja Theory's upcoming game Senua in an attempt to attract external investors to the studio.

In other words, nothing Xbox does publicly necessarily indicates what's happening behind the scenes at the company as new chief executive, Asha Sharma, makes drastic changes to increase profitability.

Ninja Theory’s Closure Was Planned Before Senua Was Even Announced

It seems like the Senua announcement was nothing more than a plan to get investors interested.

Sharma released an internal memo to all Xbox employees just a few days after the Xbox Games Showcase, warning the business needed a "reset" because "Excluding Activision-Blizzard-King, over the past five years, we have spent over $20 billion on ongoing investments in our content, platform, and hardware subsidy, but our annual revenue has declined nearly half a billion during that time. Going forward, this cannot continue."

Xbox's woes have been numerous over the past few years — the Xbox Series X/S failed to capture a significant chunk of the market, and sales declined year-on-year. Xbox Game Studios invested heavily in acquisitions, but very few of these newly acquired studios produced a hit game, with industry mainstays like Bethesda performing below expectations.

A disjointed strategy of porting exclusives to PlayStation 5 has further alienated the brand's core audience. It's difficult to see how Xbox can claw its way back to the cultural relevance it had in the Xbox 360 era without a wave of huge releases.

State of Decay 3