Kinda Funny Games Daily: Video Games News Podcast
Kinda Funny Games Daily: Video Games News Podcast

State of Decay Studio Splits From Xbox, Suffers Layoffs - Kinda Funny Games Daily 09.23.26

September 23, 2026

AI Summary

5 min read

Undead Labs Goes Independent With Layoffs, Xbox Gets Its Own Platinum Trophy

Undead Labs, the studio behind the zombie survival franchise State of Decay, has officially split from Xbox and become an independent employee-owned studio — but the transition came with a painful cost. The studio confirmed it laid off a "significant number" of employees, including some who worked on State of Decay 3, in a statement that read: "It's difficult to reach this moment knowing that not everyone who helped us get here gets to make the rest of the journey with us." Microsoft said Undead Labs regained its independence under similar terms to Double Fine and Compulsion, which split from Xbox earlier this year with their IP, back catalogs, and runway funding.

The Cost of Independence

The layoffs at Undead Labs follow a pattern that has become sadly predictable. When Double Fine went independent about a month ago, it also had layoffs. The logic is brutal but straightforward: studios staff up under the financial umbrella of a major publisher like Microsoft, and when they lose that backing and go independent, they have to adjust their headcount to match their actual revenue expectations.

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What you'll learn

  • 1 (02:35) **State of Decay Studio Splits From Xbox, Suffers Layoffs** - Undead Labs confirms it is becoming an independent employee-owned studio and laying off a significant number of employees, including some who worked on State of Decay 3.
  • 2 (09:50) **Xbox’s Shifting Strategy and Studio Management** - The conversation expands to critique Xbox's leadership, arguing that a hands-off approach led to bloated projects and that the sudden demand for profitability left studios unprepared.
  • 3 (45:10) **Xbox Mythic Achievements Revealed** - A new update to the Xbox PC app reveals "Mythic Achievements," Xbox’s version of the PlayStation Platinum trophy, complete with a unique unlock sound.
  • 4 (50:18) **New Silent Hill Film Reportedly in the Works** - A Wall Street Journal profile on producer Roy Lee mentions "the Japanese horror classic Silent Hill" among 20 video game projects in development, hinting at a new film.
  • 5 (56:29) **Sega Nearly Canceled Sonic, First Movie Saved It** - Sonic Team head Takashi Iizuka says Sega higher-ups wanted to cancel the entire Sonic franchise, but the success of the first live-action *Sonic* movie in 2020 changed the course of the series.
  • 6 (59:39) **Wii News: Rainbow Six Siege Rewards, Well Dwellers, Mr. Records** - A roundup of smaller stories, including Siege rewarding players who stick around during GTA 6, the well-reviewed indie *Well Dwellers*, and *Mr. Records* coming to all consoles.
  • 7 Standout Quotes

+ Full timestamped outline available in the app

Guests on this episode

Greg Miller

Show Notes

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Time Stamps - 00:00:00 - Start
00:05:19 - Undead Labs makes 'significant' layoffs after splitting from Xbox
00:17:51 - SuperChats
00:36:54 - Ad
00:39:55 - A new update for the Xbox PC App reveals: Xbox Mythic Achievement
00:45:15 - The producer of Zach Cregger’s Resident Evil and Weapons is reportedly working on a new Silent Hill film
00:50:00 - Sega wanted to cancel the entire Sonic series but the first movie saved it, says Sonic Team head Iizuka
00:54:16 - Wee News!
00:56:59 - SuperChats & You‘re Wrong




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Kinda Funny Games Daily: Video Games News Podcast

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