- 0-20%: Unlikely - Lacks credible sources
- 21-40%: Questionable - Some concerns remain
- 41-60%: Plausible - Reasonable evidence
- 61-80%: Probable - Strong evidence
- 81-100%: Highly Likely - Multiple reliable sources
90%
Highly Likely
It's hard to believe, but it seems like even State of Decay 3 developer Undead Labs may be in danger of being closed by Microsoft in the imminent round of Xbox layoffs.
The studio recently kicked off Alpha testing and even nailed down a 2027 launch window across PC, PlayStation 5, and Xbox Series S|X, and yet it may still face closure (or they may be sold or go independent, in the best-case scenario) as Microsoft trims its first-party studio roster in an attempt to restore profitability.
The news came from the press conference held yesterday by the Communications Workers of America (CWA), which features over 3,500 unionized Xbox employees. You can read our full report on the conference here. With regard to this story, the four studios mentioned as at risk are Double Fine Productions, Ninja Theory, Compulsion Games, and Undead Labs. We knew about the first three, but the latter is new (later confirmed by Windows Central's Jez Corden). Then again, the Seattle-based studio's situation is not so different from Ninja Theory's, which also unveiled Senua as its latest project due in 2027.
In fact, if we look at the respective outputs, Ninja Theory launched Senua's Saga: Hellblade II in 2024, while Undead Labs hasn't released anything since 2018's State of Decay 2. In 2027, it will have been nine years; granted, they supported State of Decay 2 for a few years post-launch, but that's still a lot of time without launching anything.
If we look at the bigger picture, Xbox is basically undoing most of the acquisitions it made between 2018 and 2019. The Initiative already closed a while ago, then there's these four studios and Playground Games (which is one of the few safe ones), Obsidian, and inXile. Obsidian has released many games in these eight years, but none of them were a true commercial hit, while inXile is still finishing its ambitious first-person steampunk action RPG Clockwork Revolution, also scheduled for 2027. This game may be safe, though, as Sharma picked it as one of two Xbox console exclusives alongside Gears of War: E-Day.
This is only the tip of the iceberg, as rumors also suggest massive upheavals at Bethesda/ZeniMax, with hints that only those studios working on Elder Scrolls and Fallout games are truly safe. That rumor was shared by industry veteran George Broussard, who now says this could be the largest single layoff in gaming history, potentially affecting thousands of employees.
About the author: With over two decades of experience in gaming journalism, Alessio Palumbo has led the gaming vertical at Wccftech since August 2015. He started working at a young age for Italian websites like Everyeye.it, Gamestar.it, Nextgame.it, and Multiplayer.it before kickstarting the indie English-language publication Worlds Factory as its founder and Editor in Chief. In the last decade, he has coordinated the overall output of Wccftech's gaming section, managed PR relations, assigned reviews, produced daily news coverage, edited gaming content as needed, and delivered game reviews. Arguably, his trademark content is the long series of exclusive developer interviews that have been cited by Wikipedia and by the biggest news media and gaming publications. His passion for technology also makes him knowledgeable when it comes to gaming hardware and tech. His favorite genres include RPGs, MMORPGs, and action/adventure games.
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