Microsoft could be preparing for another significant round of layoffs, and new reports suggest several Xbox Game Studios may be affected. Among the studios reportedly at risk is Undead Labs, the developer behind the long-awaited State of Decay 3, creating fresh uncertainty surrounding one of Xbox’s most anticipated first-party titles.
Although Microsoft has not officially confirmed the reported layoffs, multiple reports indicate the company could begin making cuts as early as July. If accurate, the restructuring would impact several internal development teams and could become one of the largest workforce reductions the Xbox division has seen.
Microsoft Reportedly Planning Another Round of Xbox Layoffs
According to recent reports, Microsoft may begin another wave of layoffs across its gaming division in early July. The information reportedly originated from a press call involving Communication Workers of America District 9 Vice President Frank Arce before being reported by GamesBeat.
The reported cuts are expected to affect multiple Xbox Game Studios, with more than 400 positions potentially at risk across the studios currently named. The reports also suggest additional reductions could extend beyond Xbox Game Studios into other Microsoft-owned gaming divisions.
Should the reports prove accurate, the layoffs would continue Microsoft’s ongoing restructuring efforts following several previous rounds of job cuts that have affected its gaming business over the past few years.
Undead Labs Reportedly Among the Studios at Risk
One of the biggest concerns for Xbox players surrounds Undead Labs.
The studio is currently developing State of Decay 3, the next installment in the popular zombie survival franchise. First revealed during the Xbox Games Showcase in 2020, the game has remained one of Microsoft’s biggest announced first-party projects, although an official release date has yet to be announced.
Reports now claim Undead Labs could be among the studios facing closure if Microsoft’s latest restructuring moves forward. While no official decision has been announced, the possibility has raised concerns throughout the gaming community.
Neither Microsoft nor Undead Labs has publicly commented on the reports at the time of writing.
What Could Happen to State of Decay 3?
If Undead Labs were to experience significant layoffs or close entirely before State of Decay 3 launches, the game’s future could become considerably more uncertain.
Microsoft could choose to move development to another internal Xbox Game Studios team, continue production with a reduced workforce, or reorganize development under a different structure. Any of these scenarios could affect the game’s development timeline, release plans, or post-launch support.
At this stage, however, there is no official indication that State of Decay 3 has been delayed or cancelled. The reports relate only to the possibility of future restructuring, and Microsoft has not announced any changes to the project’s development.
Other Xbox Studios Named in the Reports
Undead Labs is not the only developer reportedly facing an uncertain future.
The reports also mention several other Xbox Game Studios, including:
- Double Fine Productions
- Compulsion Games
- Ninja Theory
Combined, the reported cuts across these studios could exceed 400 employees.
Beyond Xbox Game Studios, Blizzard and Bethesda are also reportedly expected to experience further workforce reductions as Microsoft continues evaluating its gaming operations following the Activision Blizzard acquisition.
One report described the proposed restructuring as potentially becoming the largest single wave of layoffs for the Xbox brand.
Microsoft Has Yet to Confirm the Reports
Despite the growing speculation, Microsoft has not officially announced another round of Xbox layoffs or confirmed that any of the studios named in the reports will be closed.
Until an official statement is released, the reported layoffs should be treated as unconfirmed. Nevertheless, the reports have sparked concern among fans, particularly those looking forward to State of Decay 3, as any major restructuring at Undead Labs could have an impact on one of Xbox’s most anticipated upcoming exclusives.
Whether Microsoft addresses the reports in the coming days remains to be seen, but the gaming industry will be watching closely for any official announcement regarding the future of Undead Labs, State of Decay 3, and the wider Xbox Game Studios lineup.
