Phillip Holt has spent the better part of a decade watching his studio’s fate get kicked around like a zombie in a woodchipper. And now, having finally bought Undead Labs back from Microsoft, the studio head is ready to explain why State of Decay 3 got announced when it did. Does anyone else remember when that cinematic dropped in 2020, and everyone assumed the game was basically done, just waiting for a release date? Turns out, no.
A Marker on the Table That Nobody Asked For
Holt told The Game Business that the 2020 reveal wasn’t a flex. It was a panic move. Microsoft had been buying studios like a teenager with a gift card at a mall that was closing in ten minutes, and Holt figured Undead Labs was one restructuring email away from getting absorbed into the machine or sold off entirely. So he threw the announcement out there. A marker on the table. A “hey, we exist, please don’t kill us” that happened to make international headlines.
An April 2026 account said the reveal happened at Microsoft’s urging, which complicates Holt’s framing a bit. Worth noting. Doesn’t make his version wrong. Just means somebody else remembers the room differently. I think this is the most honest thing any studio head has said in years. Most executives would call that trailer a “celebration of the franchise” or “a thank you to the fans.” Holt just admits he was scared. Refreshing. Also kind of bleak.
The Team Was Basically Three Guys and a Whiteboard
For years, fans assumed State of Decay 3 had been cooking since 2018. State of Decay 2 launched that year. A sequel announcement came two years later. Math says five-plus years of development. Holt blew that up. A tiny crew was poking at prototypes around 2020, but the real, actual, budget-having, everyone-shows-up-on-Monday development didn’t start until 2022 or 2023. That’s not a long dev cycle. That’s a brisk sprint compared to whatever “Duke Nukem Forever” was doing in the desert.
Holt even admitted he got himself in trouble a while back by saying the studio “didn’t really have a team” on the game. He clarified that a very small team was involved. The clarification is funnier than the original quote. “We had a team, technically, if you count Dave and the guy who refills the coffee machine.” And then there’s the April 2026 line that the game “was in a Word document.” That’s the real punchline. Not a vision statement. Not a roadmap. A Word document. I’ve written grocery lists with more ambition.
Xbox Was Buying Everything That Wasn’t Nailed Down
Let’s zoom out. Microsoft bought Undead Labs in 2018. Same wave as Ninja Theory, Compulsion Games, Playground Games. Holt didn’t think Redmond was done shopping. He suspected the company would pivot from buying small studios to chasing big, absurd, headline-grabbing acquisitions. He was right. Activision Blizzard happened. Bethesda happened. Holt saw the writing on the Xbox-branded wall and acted accordingly.
“We were acquired as part of this thing, and I didn’t know what would happen next,” Holt said. “I think you could look at the landscape and see that they weren’t done.” He’s not naming names, but we all know how that movie ended.
Independence Came With a Body Bag
Undead Labs is now employee-owned. Full Measure is the holding company. Sounds lovely. It wasn’t. Splash Damage, the UK studio best known for making Gears Tactics, was set to acquire Undead Labs, and that deal fell through. So the studio had to go it alone. That transition came with a “significant number” of layoffs, which Holt described as cutting people he would “hire again in a heartbeat.” That’s corporate for “this was terrible and I hated every second of it.”
Holt also said investors looked at Undead Labs, saw Seattle salaries, and basically clutched their wallets. “We’re in one of the most expensive places in the world to make video games,” he said. He’s not wrong. I once paid eighteen dollars for a sandwich in Seattle. It had no right to cost that much.
The Game Is Still Happening, Somehow
State of Decay 3 is in active development. The alpha ran in May 2026. Closed beta sign-ups are live now. A full alpha is rumored for 2027, so the timeline is muddy. Kotaku and DualShockers both report the beta starts on PC. A 2027 launch is the target. Game Pass day one is still happening. Holt said the studio is “pretty close to finishing this game,” which is a wild thing to say about something that was a Word document five years ago. The layoffs forced some changes, but no radical rescoping. The wheels are still on the bus.
When asked about the life-and-death stakes of hitting milestones, Holt didn’t flinch. He just talked about finishing the job. That’s the thing about people who’ve been through an acquisition, a spinout, and a round of layoffs. Deadlines stop feeling like deadlines. They start feeling like survival.
Holt also credited Game Pass with pushing the franchise to about 25 million lifetime players. Half the monthly active users have been around for two years. A quarter have stuck around for five. That’s an absurd retention rate for a zombie survival sim with permadeath and inventory management. People really love watching their favorite survivors get ripped apart.
State of Decay 3 Has One Last Chance to Stick the Landing
Look, the franchise’s history is messy. State of Decay was janky but lovable. State of Decay 2 was jankier but somehow more lovable. State of Decay 3 has been a rumor, two cinematics, one alpha, and a hostage negotiation. Holt’s transparency is refreshing, but transparency doesn’t ship a game. The closed beta will be the real test. If Undead Labs can deliver something that feels like State of Decay but with a budget and a working frame rate, the last six years of chaos might be worth it. If not, well, at least the interviews were interesting..
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