Undead Labs Goes Employee-Owned, but Layoffs Loom for a Significant Number

Undead Labs, the studio behind the State of Decay series, has confirmed a major shift in its corporate structure: it is now operating as an employee-owned game development studio. The announcement marks a new chapter for the company, which has been part of the Xbox Game Studios family since its acquisition by Microsoft in 2018. While the move to employee ownership is being framed as a positive step toward independence and worker empowerment, it comes with a painful caveat: a significant number of employees are facing layoffs.

A New Ownership Model

The transition to an employee-owned model means that the studio's workforce will collectively hold a stake in the company. This structure is relatively rare in the gaming industry, where most studios are either privately held or owned by large publishers. By becoming employee-owned, Undead Labs aims to give its developers a direct say in the direction of the studio and a share of its success. The exact details of the ownership structure have not been disclosed, but the move signals a desire for greater autonomy and a commitment to long-term sustainability.

Layoffs Amidst the Transition

Despite the optimistic framing, the announcement also confirms that a significant number of employees will be laid off. The exact number of affected staff has not been revealed, nor has the reason for the layoffs. It remains unclear whether these layoffs are directly related to the transition to employee ownership or are part of broader cost-cutting measures. The studio has not specified which projects or teams will be impacted. This news comes amid a turbulent period for the gaming industry, which has seen widespread layoffs and studio closures over the past year.

What This Means for State of Decay and Future Projects

Undead Labs is best known for the State of Decay franchise, a series of open-world zombie survival games. The studio's most recent release, State of Decay 2, launched in 2018 and has received ongoing updates. It is unknown how the layoffs and the new ownership structure will affect future projects, including any potential State of Decay 3. Fans will be watching closely to see if the employee-owned model leads to more creative risks or a change in the studio's output.

Industry Context

The gaming industry has faced significant challenges in recent years, with mass layoffs at major companies like Microsoft, Sony, and Embracer Group. Undead Labs' move to employee ownership could be seen as a response to these pressures, offering a potential alternative to traditional corporate structures. However, the simultaneous layoffs highlight the difficult realities that even employee-owned studios must confront in a volatile market. The coming months will reveal whether this experiment in worker ownership can succeed where others have struggled.