Undead Labs head Philip Holt says the studio’s move from Xbox ownership to employee ownership gives it a closer connection to its audience—but also makes delays and missed milestones more financially consequential. In an October 6, 2026 interview with The Game Business, Holt described the risk of independent development as potentially “life or death” for a studio. He was referring to business survival, not physical danger.
How Undead Labs became employee-owned
Holt told The Game Business that Xbox had planned to divest Undead Labs. The studio’s employees ultimately bought it through Full Measure, an acquisition vehicle Holt created. He said Full Measure’s shareholders are Undead Labs employees and that stock options were being issued to staff.
Holt did not disclose the purchase price, employee ownership percentages, or the complete legal terms of the transaction. He described Full Measure as an unusual company formation: he was not its first employee, did not raise startup capital, and did not take all the commercial risk. In his account, current and former team members had created the studio’s value, which shaped the decision to pursue employee ownership.
Why independence makes delays riskier
Holt contrasted the cushion of a large parent company with the tighter exposure of an independent studio: “As part of a multi-trillion company, a slight delay or a missed deadline can be managed. As an independent, it could be life or death.” The “multi-trillion” description is Holt’s characterization of Microsoft and Xbox’s scale, not a measured valuation presented in the interview.
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The underlying difference is financial exposure. A large business can manage a project’s slippage within a broader operation; an independent, pre-revenue studio has to align its costs, financing, development milestones, and eventual launch revenue more directly. Holt said Undead Labs needs a durable cost structure that can carry it through launch and be supported by the revenue the game generates. He also said the studio must make a profit and pay its employees and partners.
What the change means for the studio’s focus
Holt said independence brings a more direct obligation to players: “As an independent, we really get to serve an audience.” He framed that audience focus alongside the need for a sustainable business, not as a substitute for it. In his words, “any company’s obligation is to be worthy of a team’s commitment.”
He also described transparent communication and employee commitment as part of how the studio approaches independence. The interview presents the ownership change as a shift in responsibility: the team has a stake in the company, while the studio must still build a game and business capable of supporting that commitment.
What Holt said about State of Decay 3
In the October 6, 2026 interview, Holt described State of Decay 3 as being in alpha and scheduled for the following year. That is the schedule as reported at the time of the interview, not a guarantee that the game would launch in 2027; release plans can change.
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1Scan for outdated or missing drivers - takes under a minute2Clear out junk files and repair common Windows errors3Fix the driver behind crashes, sound loss and screen glitchesHolt said the game was announced in 2020, had a small team until around 2020, and that development picked up in 2022 or 2023. Those development-history details and the alpha status are his account in that interview, rather than independently updated production information.
External development support and co-op
The interview named Virtuos, Wushu, and Blind Squirrel as studios supporting State of Decay 3. Holt said the game’s four-player shared-world co-op is Undead Labs’ largest investment. He also pointed to Game Pass’s reach as a way players could bring friends into the game across platforms.
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What the interview does—and does not—establish
The clearest picture is of a studio trying to balance audience service with the financial discipline independence requires. The interview gives Holt’s account of the ownership transition, development priorities, and business pressures; it does not provide transaction terms, ownership percentages, or a quantified comparison of the financial risks facing parent-owned and independent studios.
For franchise context, Xbox identifies State of Decay 2: Juggernaut Edition as an Undead Labs game. Its official listing describes the edition as including the base game and three add-on packs, a new map, remastered graphics, technical improvements, and an updated tutorial, with Xbox and Windows platforms and Game Pass availability: Xbox’s State of Decay 2: Juggernaut Edition page. That existing game’s availability does not establish a physical edition or retail listing for State of Decay 3.
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