Report: State of Decay dev Undead Labs suffered from mismanagement, toxic culture

State Of Decay 3 Ice
State Of Decay 3 Ice (Image credit: Xbox Game Studios)

What you need to know

  • Undead Labs is one of the many teams at Xbox Game Studios, focused on the State of Decay franchise.
  • According to a new report, Undead Labs has faced several issues since being acquired, with HR problems and mismanagement from studio leadership.
  • Microsoft has reportedly taken a hands-off approach with the studio for the most part.
  • Some of the employees are reportedly hopeful for the current state of the studio.

Acquired in 2018, Undead Labs is one of the many teams picked up by Microsoft as part of its rapid expansion in gaming over the last four years. The studio is working on its biggest game yet, State of Decay 3, but a new report indicates the studio has struggled with leadership over the last couple of years.

According to a report from Kotaku, which cites 12 current and former employees at Undead Labs, all speaking anonymously, Undead Labs has faced problems in its management and HR structure over the last few years as the team has struggled with early development of State of Decay 3.

Employees state that pre-production has been messy, with siloed teams working on features like refined parkour movement or dynamic animal spawns, even though the core "player fantasy" wasn't decided upon. These issues were reportedly excarberated by management decisions like having the game announced with a trailer early at the June 2020 Xbox Games Showcase, with one current developer stating that "we didn't want to announce the game because we didn't even know what it was at that point."

Kotaku states that former studio head Jeff Strain did not respond directly to its requests for comments. Instead, Strain published a list of responses to questions on his Medium on Wednesday. Strain is stated as acting like an "absentee father" before leaving the studio. On his Medium, Strain writes that "I can understand how some people could see it that way," citing his general level of exhaustion and travelling frequently to visit his family.

Employees allege that women at Undead Labs faced issues with having their voices heard in meetings or being listened to at all, something described not as one particular serious incident but instead a "death by a thousand papercuts version of sexism." Meanwhile, former HR head Anne Schlosser was accused of being unhelpful towards people who did turn in complaints.

"The culture the studio had up until recently was not the most hospitable for anyone that was not a white cishet man," said one current developer, adding that "It's improved in the last six months or so. But the studio hired a lot of diverse talent that it did not adequately support [in the past]."

Current studio head Philip Holt is also accused of "fast-tracking" the employment of his friends from other studios, something Microsoft explicitly denied, according to Kotaku. It's not clear what the breaking point was, but Microsoft eventually stepped in, interviewing numerous employees, which was followed by the departure of Schlosser from Undead Labs in September 2021.

The development of State of Decay 3 is also noted to have had a rough pre-production phase, with pressure from Holt on the team to meet specific internal milestones. Kotaku notes that outside of the exception of Schlosser mentioned above, Microsoft has taken a very hands-off approach with Undead Labs.

"There was no visible intervention or support from [Microsoft]," per one employee.

Some employees reportedly think the studio is now on the right track, with one saying of State of Decay 3 that "it could be such a cool game and we've got a lot of great people working on it, and I just hope we don't repeat the terrible habits of the last few years."

Samuel Tolbert
Freelance Writer

Samuel Tolbert is a freelance writer covering gaming news, previews, reviews, interviews and different aspects of the gaming industry, specifically focusing on Xbox and PC gaming on Windows Central. You can find him on Twitter @SamuelTolbert.