Undead Labs goes independent, State of Decay 3 still bound for Game Pass
State of Decay 3 will still launch on Xbox Game Pass on day one, and the studio making it is now independent.
Undead Labs announced on 22 September 2026 that it has completed its separation from Xbox and is now an employee-owned game development studio. It will keep developing its zombie survival series under a new publishing agreement. That is the news in short.
The studio confirmed it will continue work on State of Decay 3, the next entry in its open-world survival series about communities holding out against the undead State of Decay. It has reached an agreement with a new publisher to keep the project alive, according to reporting published on 22 September 2026 GameSpot. The name of that publisher was not disclosed.
Game Pass, Microsoft's subscription service that offers a library of games for a monthly fee, remains part of the plan. The game will still launch on the service on day one when ready, the same report said. That settles earlier uncertainty after a July report, citing the terms of the split, had suggested the studio would not be required to bring the game to Game Pass.
On development progress, the studio said State of Decay 3 is currently in alpha, an early playable version used to test core systems. It is planned to enter closed beta, a limited test with invited players, before the end of the year. Xbox had previously announced on 26 August 2026 that closed beta playtests would take place before the end of 2026.
The target is bigger than before. Release is targeted for 2027 on Xbox, PC and PlayStation, alongside Game Pass and cloud, where games run on remote servers and stream to devices. Players can already add the game to a wish list on Xbox, and Undead Labs has opened sign-ups for future playtesting at playtest.stateofdecay.com.
The split ends an eight-year run inside Microsoft. The original State of Decay launched in partnership with Microsoft in 2013. Microsoft acquired Undead Labs in 2018. Studio Head Philip Holt said the team was now operating independently.
For fans, this means continuity with a twist. State of Decay 2, the previous entry, received its final content update in October 2024. Its Juggernaut Edition remains available with Game Pass. The next game now points to a wider release, with PlayStation listed alongside Xbox and PC for the first time in the series history under Microsoft ownership.
What makes this stand out is the structure. Employee ownership is rare for a studio of this size. Thousands of decisions now sit with the team itself, on deadlines it sets with a new publisher, while players get a straight commitment: alpha now, beta this year, 2027 in sight.
