State of Decay 3 may no longer arrive on Xbox Game Pass at launch, following Microsoft's decision to part ways with the game's developer, Undead Labs. The studio is among those Microsoft is offloading after announcing 3,200 job cuts across its Xbox division. This matters because every prior trailer and update for the game, including June's gameplay reveal at the Xbox Games Showcase, had promised a day-one Game Pass release as a first-party title.

Microsoft says it has found a buyer for Undead Labs and will keep funding the game until it is released. However, a report by Game File notes that the agreement frees State of Decay 3 from "any Xbox-controlling terms", meaning a Game Pass launch is no longer guaranteed and would now require a separate deal with the studio's new owner. That owner's identity is reportedly due to be revealed later this summer. The game, first announced in 2020, is currently set for release in 2027 on PC, PS5 and Xbox Series X/S.