Xbox Layoffs Loom: Undead Labs at Risk as Devs Demand Worker Protections

Microsoft's Xbox gaming division is bracing for what could be a wave of massive layoffs this summer, with multiple first-party studios reportedly in the crosshairs. According to reports, Undead Labs — the Seattle-based developer behind the State of Decay franchise — is at risk of closure, joining a growing list of studios said to be facing the axe that includes Double Fine, Compulsion Games, and Ninja Theory. The timing is particularly striking for Undead Labs, as the news comes just weeks after State of Decay 3 was revealed for PlayStation 5, raising serious questions about the future of the project should the studio be shuttered or sold.

As the situation develops, Xbox developers across the division are not staying silent. Workers have begun calling for formal protections ahead of the anticipated cuts, with union organizers and employees pushing back against what they describe as an opaque and alarming process. A broader report from GamesBeat shed light on the union response, revealing that Undead Labs is also reportedly being considered for a sale, suggesting Microsoft may be seeking buyers for some studios rather than outright closing them. The groundswell of worker advocacy signals a broader reckoning within the industry as one of gaming's largest publishers weighs sweeping restructuring decisions.

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