Xbox might close State of Decay studio Undead Labs, report says

1 hour ago 1

Earlier in June, Bloomberg reported that Xbox was planning to make major layoffs as part of new Xbox CEO Asha Sharma's "reset" of Microsoft's gaming business. Compulsion Games, Double Fine, and Ninja Theory were identified as at risk of being shut down by Microsoft. New reporting indicates State of Decay developer Undead Labs is also at risk in what might be one of the largest series of layoffs for Xbox.

On Monday, GamesBeat named Undead Labs, alongside the three previously aforementioned studios, as a studio in danger if Microsoft is unable to find a buyer for them. Hundreds of employees across the four studios may lose their jobs if the stated studios are shut down, including 110 at Undead Labs, according to GamesBeat.

Undead Labs is currently working on State of Decay 3, its next survival game filled with zombies. It was shown off at the Xbox Games Showcase three weeks ago, and players are already trying out an alpha version. State of Decay 3 is slated for a 2027 release, but could potentially be canceled if Undead Labs is shuttered.

Employees at Compulsion Games, Double Fine, Ninja Theory, and Undead Labs aren't the only ones at risk. GamesBeat notes Blizzard, Bethesda, and other Xbox divisions could be hit with percentage layoffs in what might be "the biggest single cut series for Xbox," according to a GamesBeat source.

3D Realms (formerly Apogee Software) co-founder George Broussard said on X Monday evening that a list of Xbox studio closures was shared with him ahead of the likely layoffs in July. "This will likely be the largest single layoff event in gaming history," he wrote. In a prior post he said layoffs may begin Monday, July 6, but to "treat as rumor pending official confirmation."

Even with that caveat, all signs have pointed to significant layoffs at Xbox happening in July (after the end of Microsoft's fiscal year). We won't know the full extent until after the layoffs happen, but rumors of "the biggest single cut series for Xbox" do not seem greatly exaggerated, unfortunately.