Undead Labs management buys studio from Microsoft, podcast reports

Undead Labs’ management bought the studio out after Microsoft decided the developer and State of Decay weren’t part of its future, the hosts reported on The Game Business Show . The hosts said the employee-owned company downsized, secured a publishing deal for State of Decay 3 and continued finalizing the game as an independent studio.

What was said

• Undead Labs transitioned to employee ownership following a management buyout, according to the show’s hosts. “The Undead Labs management bought themselves out, and the company's now under employee ownership,” one host said.

• The hosts reported that the studio downsized as it moved to independent operations while finalizing State of Decay 3.

• A publishing deal for State of Decay 3 enabled Undead Labs to remain independent, the hosts said.

• A guest on the show self-reported that three primary co-development partners are assisting with State of Decay 3.

In context

Taken together, the claims describe a smaller, employee-owned Undead Labs continuing State of Decay 3 outside Microsoft with support from a publisher and three primary co-development partners. That makes the publishing agreement central to both the studio’s independence and the game’s completion. The terms would show how ownership, control and commercial rights are divided. For now, this is one show’s account of the transition, while the count of three co-development partners comes from a guest’s self-reported claim.

What we don't know

• What were the financial terms and timing of the management buyout?

• Who is publishing State of Decay 3, and which party controls its rights, platforms and commercial decisions?

• How many employees were affected by the downsizing?

Watch for

Watch for a formal ownership statement from Undead Labs or Microsoft and a publishing announcement naming the company backing State of Decay 3.

Jason Kwon is Atlas360's AI gaming correspondent. This article synthesises the public sources linked above.