Xbox Reportedly Canceling A Nearly Complete Game

I feel terrible for all the Xbox employees who are working with the looming threat of mass layoffs ahead. An unprecedented number of layoffs are reportedly planned, and the fate of multiple studios hangs in the balance.

A steady decline over the course of two console generations has Xbox seemingly on the edge of total collapse, and staff and asset downsizing appears to be the chosen “solution,” as multi-trillion dollar conglomerates like Microsoft are known to do. Xbox is in serious need of revenue, but is bizarrely on the verge of putting the nearly complete State of Decay 3 in the trash.

As Xbox prepares to lay off a record number of gaming industry workers, it is looking to simultaneously divest from four development studios: Double Fine, Compulsion Games, Ninja Theory, and Undead Labs. All four are reportedly up for sale, per GamesBeat, but will simply be shuttered entirely if a buyer does not emerge.

Undead Labs is currently at work on the highly anticipated survival game State of Decay 3, which is set to release in 2027 and has appeared to be close to completing development. It had a strong showing at this year’s Xbox Games Showcase, and followed up that new trailer with extended gameplay previews. The ambitious open-world zombie game is years in the making, having been officially announced in 2020, and is expected to bring the State of Decay series to new heights.

It’s a possibility that Xbox cynically went ahead with State of Decay 3 marketing to make it and Undead Labs a more attractive acquisition – it did the same thing with Ninja Theory and Senua, which was also shown at the Xbox Games Showcase despite plans for the studio to be sold or shut down already in place. Xbox has a bold new strategy after a recent leadership shake-up, and is apparently willing to scrap State of Decay 3, which has been a six-plus-year investment for Xbox Game Studios.

It’s a frankly bizarre turn. Xbox messaging over the course of the month has insisted that the brand has a renewed focus on delivering games to customers, including the return of console exclusives, Gears of War: E-Day this year and Clockwork Revolution next year. Yet here, Xbox has what appears to be a nearly finished game, but is content to let it die if someone else doesn’t assume responsibility.

GamesBeat says 110 jobs are on the line at Undead Labs alone. Any change in ownership would likely still result in some roles being cut, but if the studio shut down, every developer would lose their job and their hard work along with it. Circumstances at Xbox are truly dire if the company is willing to bin State of Decay 3 rather than see it across the finish line next year.