Undead Labs has successfully completed its separation from Microsoft and now operates as an independent, employee-owned studio following Xbox's major restructuring announced in July. The studio's survival is particularly encouraging given that Microsoft laid off 3,200 employees total and divested from several renowned studios as part of a "major reset" across its gaming division.

State of Decay 3 development continues actively, currently in alpha with a closed beta targeted for the end of 2026 and full release planned for 2027 across Xbox, Game Pass, PC, and PlayStation. The separation marks a significant milestone after Microsoft's 15-year relationship with Undead Labs, including the original game's 2013 publication and the studio's 2018 acquisition. Other divested studios such as Double Fine and Compulsion Games have also successfully separated with their intellectual property and funding, though Ninja Theory faces uncertainty with failed acquisition deals and potential closure consultations underway.