Undead Labs is now employee-owned after Xbox divestment, CEO Philip Holt says

Undead Labs is now employee-owned, CEO Philip Holt told GamesIndustry.biz. In July, Xbox announced plans to divest five studios, including Undead Labs, which Microsoft acquired in 2018. Holt said the studio had a little warning before the announcement but it was still a shock.

Holt said Microsoft first looked for a buyer, and the studio also spoke to investors. Because Undead Labs is pre-revenue, he said, many investors wanted a majority stake and control. The team switched to seeking publishing money instead. It reached an agreement with a publisher that has not been named. Holt says that money plus cash on hand is enough to finish State of Decay 3, with no outside investors.

On structure, Holt said a newly registered Delaware C corporation acquired Undead Labs, and the studio is now issuing equity to all employees. Holt says he does not hold a majority stake. Multiple stock classes with super voting rights give him voting control from a minority position, which leaves more shares for staff. He said that for now employees can mostly sell shares back to the company, and that dividends are a possibility if the studio turns a profit.

The change came with job cuts. Holt said the studio made a significant number of layoffs in September and declined to give a number, saying he did not want the story reduced to a statistic. Undead Labs had just over 100 employees before and has fewer now. It has offices in Seattle, Champaign and Orlando, some remote staff, and co-development partners including Wushu Studios in the UK.

On the game, State of Decay 3 has a 2027 release window and about 8,000 players are currently testing it. Holt said a post-launch roadmap is in the works. He described a creative pivot away from an MMO structure, with the current game built since around late 2022 or 2023. He also said the studio is keeping the minimum spec as broad as it can. These are Holt's statements from the interview, not independently confirmed details.