Xbox's studio reset claims another developer as Undead Labs faces potential closure

Undead Labs, the Seattle-based studio behind the State of Decay franchise, has been identified as the fourth Xbox first-party developer at risk of closure as Microsoft continues its sweeping restructuring. The studio is reportedly searching for a buyer, with around 110 jobs on the line.

The details:

• As reported by GameesBeat, Undead Labs joins Ninja Theory, Double Fine, and Compulsion Games as Xbox studios named as facing potential closure or sale, bringing the total number of jobs at risk across those four studios to approximately 435
• The studio is best known for the State of Decay series, with State of Decay 3 having received its first gameplay trailer at the Xbox Games Showcase earlier this month, targeting a 2027 release on Xbox Series, PS5, and PC
• That makes Undead Labs the second studio to have showcased an upcoming game at June's Xbox event now reported to be facing closure, alongside Ninja Theory, whose Senua's Saga: Hellblade III was also shown
• The closures are part of what Xbox CEO Asha Sharma has described as a "business reset," with Microsoft's gaming division reportedly operating at a 3% profit margin
• Neither Microsoft, Xbox, nor Undead Labs has officially confirmed any of the reports