‘Irresponsibly Transparent’: How Undead Labs’ Boss Braced Staff for Layoffs to Rescue State of Decay 3 from Xbox
When a first-party development studio separates from Microsoft, corporate press releases usually emphasize newfound creative freedom. The harsh reality behind the scenes is almost always about survival. To extract Undead Labs and keep State of Decay 3 alive during Microsoft's aggressive gaming reset, studio head Philip Holt made an unconventional leadership call.
Speaking with industry publication The Game Business, the head of the Seattle-based developer opened up about the messy process behind their management buyout (MBO). While the move resulted in heavy job cuts, Holt chose total honesty to soften the blow for the team.
Preparing for Job Losses Instead of Manufacturing False Realities
When Microsoft initiated deep cuts across Xbox Game Studios in June, Undead Labs faced outright closure after an acquisition deal with Splash Damage fell apart. Instead of shielding developers behind corporate platitudes, Holt decided to tell his staff the raw truth from day one.
“Rather than keeping them in the dark and manufacture some alternate reality, I just brought them alongside. That probably reduced some anxiety. I tried to put myself in their shoes. You’re not in control, you don’t really know what’s happening, you know your job might be at risk, and you’re wondering if this game is actually going to finish. So, I tried to share as much as I could. We had pretty direct conversations. We talked early on that under probably any scenario, there’d be job losses. On the day of the layoff, people were prepared.”
Being what Holt described as “irresponsibly transparent” helped maintain trust across the remaining team. Surviving employees recognized the painful restructuring as a vital condition to preserve the studio rather than an act of executive malice.
From Xbox Tentpole Ambition to Pure Independent Survival
The team successfully completed their management buyout under a holding entity called Full Measure, referencing Abraham Lincoln’s Gettysburg Address (the last full measure of devotion). Undead Labs is now an employee-owned studio, with stock options currently being issued to staff.
Yet the shift in financial reality is massive. Inside Xbox, State of Decay was positioned to climb the ranks as a major flagship IP backed by endless corporate capital. As an independent outfit, every milestone is now critical to ensure long-term viability alongside a new, unannounced publishing partner.
This survival scramble mirrors the broader fallout across Microsoft's gaming division, as seen during the recent wave of job cuts and closure threats at Ninja Theory.
PC Playtest on the Horizon Ahead of 2027 Launch
Despite shrinking the team to secure its future, Undead Labs has not abandoned its creative vision. Holt confirmed that State of Decay 3 has not undergone a drastic reduction in scope, even though production pipelines required immediate restructuring.
The road ahead is already taking shape. Undead Labs will soon open player registrations for an initial closed PC beta test, paving the way for a broader alpha and a targeted 2027 release window.
After eight years without a new release and a turbulent exit from Xbox, Undead Labs faces its defining test. Survival is no longer underwritten by corporate budgets, and the future of State of Decay now rests entirely in the hands of its creators.
SEO consultant for over 20 years and digital entrepreneur, Charles 'Grimtag' Ronchain is the founder of Pro-Gamer.gg, Retrocharting.com, and Gamescharting.com. A competitive gamer, streamer, and retro game collector, he has worked in the video game industry for over 15 years, notably as a consultant for leading game price comparison platforms. Passionate about real-time performance data and gaming technology, he analyzes competitive esports, gaming hardware benchmarks, and creator workflows on Pro-Gamer.gg with an authentic player perspective.
