Undead Labs confirmed its split from Microsoft's Xbox, transitioning to an independent, employee-owned studio. The announcement, posted on LinkedIn, revealed the studio will be laying off a "significant number" of staff. While the exact count and affected departments remain unspecified, the layoffs will not impact the development of State of Decay 3.

The studio expressed deep difficulty in saying goodbye to talented developers who helped shape the franchise. They emphasized that departed employees' work remains part of State of Decay 3 and future projects. The studio encouraged hiring managers to contact them regarding the departing talent.

This news follows a pattern of industry-wide layoffs after major corporate splits, similar to what occurred with Double Fine Games after its Xbox separation.