State of Decay 3 Team is “Pretty Close to Finishing” Development, Says Studio Boss

Philip Holt also spoke about how the team had to make changes to the project due to the recent layoffs in light of Xbox's reset.

Posted By | On 08th, Oct. 2026

state of decay 3

Following Undead Labs going independent and becoming entirely owned by its own employees, the studio is now working hard on State of Decay 3. In an interview with The Game Business, studio boss Philip Holt spoke about the progress made on the project, and even discussed how the recent layoffs have led the studio to make some changes to the game.

“We’re pretty close to finishing this game. And there’s a lot in it. I think folks that saw us at Gamescom can attest to that. I think our alpha players can attest to that. And obviously, with a significant number of people leaving the company, we’ve got to make some changes. But I don’t think we’re dramatically addressing scope in that way.”

On the subject of how it has taken the studio eight years counting from the release of State of Decay 2 to make a new game, Holt responded by saying that “I don’t think it’s taken that long, actually.” He brought up the fact that the team spent quite a bit of time supporting State of Decay 2, and the first trailer for State of Decay 3 only came out in 2020.

“If you measure it from when State of Decay 2 shipped, yeah, we’re approaching eight years. If you measure it from our first trailer with the infamous zombie deer, that’s also a long time. I got myself in a little bit of trouble by saying we didn’t really have a team working on the game at that point, which wasn’t entirely true; we had a very small team. We’ve had a small team on the game since maybe 2020. But development didn’t really pick up until 2022 or 2023.”

The decision to kick off full production of the game came down to the fact that the studio started feeling some anxiety regarding Microsoft’s business decisions. The studio was especially worried that, as a result of all of the acquisitions, Undead Labs would get swallowed up into another team.

“I didn’t think Microsoft was done being acquisitive, and I didn’t think they’d continue buying small developers; I assumed they’d start buying big things. I was a little worried about getting swallowed up or divested before we had a chance to present to the world what we were working on. So, it was a bit of a marker on the table. I was saying, State of Decay 3, we’re announcing it, the audience knows it’s in development, and here’s a trailer to demonstrate our vision.”

In the same interview, Holt also spoke about how he was “irresponsibly transparent” with his employees at Undead Labs leading up to Xbox’s reset that resulted in around 1,600 layoffs. He noted that letting the team know what was happening was better than “keeping them in the dark and manufacturing some alternate reality.” While this resulted in anxiety, the move ultimately benefited Undead Labs since the team didn’t see Holt “as someone who’s done great damage to the people they love.”

State of Decay 3 doesn’t yet have a release date. The title is being developed for PC, PS5, and Xbox Series X/S.


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