State of Decay 3 may no longer launch into Game Pass, now that Microsoft is letting developer Undead Labs go

Microsoft is divesting Undead Labs, the developer of State of Decay 3, as part of a substantial Xbox division restructuring that will result in 3,200 job cuts. While Microsoft has secured a buyer for the studio and pledged to continue funding State of Decay 3 through its release, the acquisition agreement notably frees the game from “Xbox-controlling terms,” eliminating its obligation to launch on Xbox Game Pass.

This represents a dramatic reversal from just one month prior, when State of Decay 3 re-emerged at Xbox’s Games Showcase with a 2027 release window and explicit Game Pass inclusion promised as part of the announcement. The shift underscores the scale of Xbox’s restructuring, which has affected multiple studios including heavy reductions at Obsidian Entertainment and id Software, despite some success with titles like Grounded 2 and DOOM: The Dark Ages.

The situation highlights a peculiar irony: State of Decay 3 has accumulated more wishlists on Steam than Xbox’s own franchises like Halo and Gears of War, suggesting significant consumer interest independent of Game Pass placement. As Undead Labs transitions to new ownership, the game’s ultimate release platforms and subscription service availability remain uncertain, with Microsoft providing ongoing financial support to ensure the 2027 release.

State of Decay 3 may no longer launch into Game Pass, now that Microsoft is letting developer Undead Labs go

Sources