Unlead Labs studio head says they were ‘irresponsibly transparent’ in preparing staff for layoffs

Undead Labs has transitioned from an Xbox Game Studios subsidiary to an independent studio, with the process completing in late September following an initial announcement in July. Studio head Philip Holt has reflected on how the studio navigated this significant organizational change, particularly regarding managing staff expectations about potential layoffs.

In recent interviews, Holt acknowledged being “irresponsibly transparent” with employees about the likelihood of layoffs during the transition. Rather than keeping the team in uncertainty, he chose to be candid about the challenges ahead—a strategy he feels helped staff prepare for the difficult period. The studio has since restructured with employees becoming shareholders in the now-independent company.

The divestiture comes as Undead Labs develops State of Decay 3, which was originally announced seven years ago. Holt revealed that this early announcement resulted from anxiety surrounding Xbox’s strategic direction at the time. However, serious development didn’t begin until 2022 or 2023, with the team initially quite small. Now, with support from development partners Virtuos, Wushu, and Blind Squirrel, the game is progressing toward a planned beta test and next-year release.

Despite the separation from Xbox, the franchise remains financially healthy—State of Decay continues to attract “several thousand players daily,” sustained significantly by Xbox Game Pass, even though Undead Labs is no longer part of the Xbox portfolio. Holt noted that independence brings higher stakes than working under a major publisher; delays that larger companies can weather could prove “life or death” for an independent studio. The transition represents both a significant challenge and opportunity for Undead Labs as it works to complete State of Decay 3 as an autonomous entity.

Unlead Labs studio head says they were ‘irresponsibly transparent’ in preparing staff for layoffs

Sources