Undead Labs is now owned by its staff after buying itself from Xbox

Studio head Philip Holt set up a company called Full Measure, owned entirely by employees, to buy the State of Decay studio. A significant round of layoffs followed, and State of Decay 3 is still d...

AI-drafted from 3 sources. This story was written with AI from the outside reporting listed under Sources, and checked by automated tools before it went up. The originals have the full detail.

Undead Labs, the Seattle studio behind State of Decay, is now owned by its own staff. Studio head Philip Holt explained how in an interview with The Game Business: he set up a company called Full Measure as the vehicle to buy the studio from Microsoft, every shareholder of Full Measure is an Undead Labs employee, and the company is issuing stock options to all staff.

"This is not a typical founding of a company," Holt said. "I wasn't employee one. I didn't raise the startup capital, and I didn't take on all the commercial risk. The value that's present has been created by the team that's here, and the team that just left." He said the name comes from Lincoln's Gettysburg Address and its line about "the last full measure of devotion".

A management buyout, then layoffs

Undead Labs was one of five studios Xbox set out to divest in July. The Game Business says it understood UK developer Splash Damage was going to pick it up, but in September the buyer turned out to be the studio itself. Holt said Microsoft agreed to his offer of a management-led acquisition, and that he thought the money needed to finish State of Decay 3 was "not an insurmountable amount" to raise without Xbox.

Days after independence, the studio laid off what it called a "significant" number of people. Game Developer dates the cuts to late September. Holt would not give a figure. "I would hate to reduce the impact to those individuals to a number or statistic," he said, as GamesIndustry.biz also reported. He described himself as "irresponsibly transparent" with staff during the process, telling them early that job losses were likely "under probably any scenario", so that people were prepared on the day.

Part of the problem, Holt said, was cost. "We're in one of the most expensive places in the world to make video games," he told The Game Business, adding that investors and publishers looked closely at the studio's labour costs.

State of Decay 3 still due next year

State of Decay 3 is in alpha and scheduled for next year, according to The Game Business. Holt said the cuts forced some changes but no radical rescope. The game has an unnamed publisher, which Holt said is funding it without outside investors, and co-development partners Virtuos, Wushu and Blind Squirrel. It will still launch on Game Pass on day one, and Holt credits Game Pass with helping the series reach 25 million players.

"Independence to me is about being in a position where we're just accountable to our audience," he said. The game was first announced in 2020. Holt said a small team had worked on it since around then, but development did not really pick up until 2022 or 2023.

Sources

• How Undead Labs saved itself and State of Decay from oblivion (The Game Business)
• Undead Labs boss reluctant to share number affected by layoffs (GamesIndustry.biz)
• Unlead Labs studio head says they were 'irresponsibly transparent' in preparing staff for layoffs (Game Developer)

Image: Undead Labs via Game Developer