Marvel’s Blade and State of Decay 3—In Danger of Cancellation!

by L.W. and Ann Marie Barker

Multiple reports suggest Undead Labs, the studio behind State of Decay 3, may be sold or shut down as part of Xbox’s broader restructuring. Microsoft is reportedly looking for a buyer for Undead Labs; if none is found, the studio could close and State of Decay 3 could be cancelled. The situation is surprising given the game’s recent 72-minute gameplay showcase and 2027 release window. Undead Labs is reportedly one of four studios—alongside Double Fine, Compulsion Games, and Ninja Theory—that must secure buyers or risk shutdown. For now, State of Decay 3 is not officially cancelled, but its future remains uncertain.

Arkane Studios Lyon, the developer of Marvel’s Blade, is also reportedly being considered for closure or sale, placing the game at risk. Microsoft is said to be considering closing at least five studios, including Arkane, and may cancel Marvel’s Blade as part of cost-cutting efforts. The game’s internal release target reportedly shifted from 2026 to late 2027, and it is said to be over budget. Some insiders claim the project is “not dead”, but Microsoft has not made an official statement. So like State of Decay 3, Marvel’s Blade is not officially cancelled, though the risk appears significant.

Our take? State of Decay 3 and Marvel’s Blade have not been cancelled, but credible reports suggest both are in serious danger because of Microsoft’s restructuring, budget cuts, and possible studio closures. More clarity may come after July 6, when layoffs and restructuring actions reportedly begin.