Concern Mounts About Rumored ‘State Of Decay 3’ Cancellation At Xbox - Forbes

GamingConcern Mounts About Rumored ‘State Of Decay 3’ Cancellation At XboxByPaul Tassi, Forbes contributors publish independent expert analyses and insights. News and opinion about video games, television, movies and the internet.Follow AuthorJun 30, 2026, 10:51am EDT--:-- / --:--This voice experience is generated by AI. Learn more.This voice experience is generated by AI. Learn more.State of Decay 3Undead LabsIt’s the calm before the storm as the industry braces for large-scale layoffs in the wake of an Xbox leadership change earlier this year. There is a long list of potential studios on the chopping block for closure or potential sale, with none confirmed by Xbox yet. But a new report has become a huge concern for fans. Gamesbeat and Windows Central are both reporting that Microsoft may be trying to find a buyer for studio Undead Labs, rather than closing it down. But if that cannot happen, the studio may be shuttered, which would in turn cancel the upcoming zombie game, State of Decay 3. The game was previewed only recently at the Xbox Games Showcase, so it would be a shock. Though the amount Xbox could be about to shock the industry as a whole should not be underestimated. State of Decay 3 does not have a fixed release date and is meant to be released some time in 2027. It has already been announced for PS5, so it is not likely, if it’s even possible, that it would be reversed as part of Xbox’s new “we’re bringing back exclusives” idea. State of Decay is a long-running Xbox-specific IP that began with the first game in 2013, followed by its sequel in 2018. Now, fans have been waiting eight years for a third game after the studio was fully acquired by Microsoft. The concern is now that, on the verge of the game actually becoming a reality, it may be killed off. Unscramble The Anagram To Reveal The Phrase If this is true, it shows just how deep Microsoft is willing to cut. State of Decay 3 is not some small-scale indie game, but a much-anticipated major release. No, the IP is not on the same level as Halo, Gears, Forza or Fable, but it spans more than a decade and absolutely has a fanbase. This would be a crushing blow, probably more so than any other announced cancellation would be with these pending layoffs and shutdowns. The overall concern among Xbox fans is that the studio is going to be hacked down to its biggest series and biggest studios and simply nothing else. It’s a bad look, as the studios that were purchased were simply told to make the kind of great games they always have, and they did that. But those games did not turn out to meaningfully contribute to the financial success of Xbox, so in this new era of “hard decisions,” they may either get atomized or, at best, spun out or sold, the latter of which Xbox at least appears to be trying to do in many instances behind the scenes. Whether it’s weeks, days or hours, it’s about to be a dark time for Xbox. In terms of this specific State of Decay situation, I’ve reached out to Xbox for comment and will update if I hear back. Follow me on Twitter, YouTube, and Instagram. Pick up my sci-fi novels the Herokiller series and The Earthborn Trilogy.