State of Decay 3 studio buys itself back from Microsoft and goes independent

The studio making State of Decay 3 now owns itself.

Undead Labs has bought itself out from Microsoft and gone fully independent. Studio head Philip Holt set out the deal in an interview with The Game Business, published 6 October 2026. Undead Labs is the developer of State of Decay 3, the next entry in its zombie survival series.

The buyout was organised through a company called Full Measure, Holt said. The studio is now owned by current employees as shareholders. It is in the process of issuing stock options to all its staff, a right to buy shares at a set price in the future. Video Games Chronicle

Holt said he was "irresponsibly transparent" with staff during Xbox's reset process. He wanted no surprises. He told staff what a sale or closure could mean for jobs, so potential layoffs would be easier to take if they came.

That reset was announced on 6 July 2026. Xbox said on that date, labelled as announced, that Undead Labs had entered terms to join new ownership. Those terms included funding to complete and grow State of Decay 3. Xbox

Xbox later confirmed Undead Labs had not been closed and had gone fully independent when announcing the second phase of its reset. Holt said the self-buyout process still led to departures. He described it as "a significant number of people leaving the company", without giving a figure.

The July announcement named a second studio in the same position. Xbox said on 6 July 2026 that Ninja Theory had entered terms to join new ownership, with funding to complete and grow Senua.

What makes this stand out is the ownership model. Employee ownership is rare among studios of this size. For fans, this means State of Decay 3 continues, but under a very different employer.