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Undead Labs head Philip Holt says the studio’s move from Xbox ownership to employee ownership lets it focus more directly on players—but also leaves it more exposed to delays and missed milestones. In an October 6, 2026 interview with The Game Business, Holt called those stakes “life or death” for an independent developer, describing financial pressure rather than literal danger.

How Undead Labs became employee-owned

Xbox had planned to divest Undead Labs, and the studio’s employees ultimately bought it through Full Measure, an acquisition vehicle created by Holt, according to his interview with The Game Business. Holt said Full Measure’s shareholders are Undead Labs employees and that stock options were being issued to staff.

Holt described the arrangement as unlike a typical startup. He said he was not the first employee, did not raise startup capital, and did not take on all the commercial risk. In his view, the studio’s value was built by current and former team members, which helped shape the employee-ownership approach. The interview did not disclose the purchase price, ownership percentages, or full legal terms.

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Why Holt says independence makes delays riskier

Holt contrasted Undead Labs’ current position with its time inside Microsoft, which he described as a “multi-trillion company.” He said a large company can absorb a slight delay or missed deadline across a broader business; an independent developer has less room to do so. “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,” he said.

That phrase is Holt’s description of business risk, not a claim of physical danger. His point is that an independent studio must manage its costs, schedule, and cash flow closely because it cannot rely on a parent company to absorb the consequences of slippage. The interview does not quantify the difference between the studio’s former and current financial exposure.

What independence means for the studio’s priorities

Holt said Undead Labs was pre-revenue and needed a durable cost structure that could carry the studio through launch and be supported by the revenue the game generates. He said the company must make a profit and pay itself and its partners, while keeping service to its audience as its primary objective.

“As an independent, we really get to serve an audience,” Holt said. He also framed the studio’s responsibility to its employees as an obligation to be worthy of their commitment. These priorities do not remove commercial pressure; they describe how Holt says the studio intends to balance financial survival with making and supporting games for players.

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What Holt said about State of Decay 3

In the October 2026 interview, Holt described State of Decay 3 as being in alpha and scheduled for the following year. He said the game had a small team from around 2020, with development picking up in 2022 or 2023. These are statements from that interview, not independently updated release information, and the target could change.

Holt named Virtuos, Wushu, and Blind Squirrel as development-support partners. He said four-player shared-world co-op is the studio’s largest investment in the game, and that Game Pass reach could help players bring friends who play on other platforms. The interview does not provide a release date or further platform details.

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How the studio’s previous game fits into the story

Holt cited 38 updates to State of Decay 2 as an example of the work Undead Labs has done for its players. Xbox identifies State of Decay 2: Juggernaut Edition as an Undead Labs game, and says it includes the base game and three add-on packs, a new map, remastered graphics, technical improvements, and an updated tutorial. Xbox lists the game for Xbox and Windows and shows Game Pass availability: official Xbox game page.

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