Undead Labs Completes Management Buyout Following Xbox Exit, Nears State of Decay 3 Completion
Studio head Philip Holt revealed that Undead Labs pursued a management buyout rather than seeking a new corporate owner after Xbox's divestment, forming the independent company Full Measure with employee stakeholders. Holt explained the studio had sufficient financial capacity to complete State of Decay 3 independently and secure its own publisher, a decision he characterized as advantageous given the accelerated timeline of Microsoft's studio divestitures. The studio is reportedly close to finishing the zombie survival game with backing from a new publisher described as a strong partner for launch.
Undead Labs' transition to independence occurred during a broader wave of studio divestitures announced by Xbox in mid-2026. Rather than accept acquisition by another company, leadership pursued an employee ownership model, establishing Full Measure as the parent entity. This structure mirrors earlier transitions by studios like Double Fine and Compulsion Games, suggesting an emerging pattern in how major publishers handle studio separations.
The studio completed this transition while State of Decay 3 remained in active development. Despite significant staff reductions required by the shift to independence, studio leadership maintained that the game's scope would remain intact and that sufficient financial resources and publisher support were secured to reach launch.
This development may influence how independent studios approach financing and publishing arrangements in a competitive market. The management buyout model could become more attractive to other development teams facing similar circumstances, potentially affecting employment structures and creative autonomy across the industry. Publisher relationships could also shift, as independent studios may negotiate different terms than those owned by major corporations. The outcome of State of Decay 3's launch may signal to investors and studios whether this independence model remains viable for completing large-scale projects.