State of Decay 3 development reportedly stalled due to studio mismanagement and toxic work conditions

A new report has detailed troubled times at State of Decay 3 developer Undead Labs, accusing the studio of a toxic work environment.

The extensive report comes from Kotaku, who say they spoke to twelve current and former anonymous employees about working conditions at the studio. While many felt positive about certain aspects of the studio, instances of mismanagement and toxic work conditions seem to have trapped the game in pre-production almost two years after its original announcement.

Some of that has been attributed to Microsoft’s hands-off approach since Xbox acquired the studio in 2018. Former studio head Jeff Strain wrote in a pre-emptive response piece on Medium that the acquisition was necessary for State of Decay 3 development to go ahead. “It was clear in 2018 that Undead Labs was going to focus on the State of Decay IP, and the expectations—and initial budget—for SoD3 were way higher than anything we’d done before.”

According to the developers, not everyone was on the same page as to what State of Decay 3 should be. Nine of the sources say this was compounded by “patterns of discrimination” against minority employees. One source said: “Women’s opinions would be outright rejected, even for extremely basic code or games knowledge. No one would listen to them, even women in director-level positions were outright ignored, talked over, and blamed for problems.”

Strain would depart the company in 2019 (going on to form Possibility Space last October) and Phillip Holt, formerly of ArenaNet, would take over his position by the next year. However, employees reported that things did not improve, even going so far as to accuse Holt of nepotism and putting his own ambitions by fast tracking the hiring of his friends. Microsoft denied this portion of the report in a statement. “There is a rigorous and standardized hiring process in place at Undead Labs for all potential hires, with visibility and review from multiple studio members.”

Holt himself would decline to comment on a list of questions that Kotaku provided, instead offering up a statement via Microsoft. “Since our acquisition by Microsoft in 2018, Undead Labs has been focused elevating the quality and ambition of State of Decay and increasing the diversity and inclusivity of our studio culture.”

“Building an inclusive and supporting environment is central to our vision of our culture, how we enable our teams to do their best work, and how we build the best games. I recognize that some of our employees, current and former, have shared that their experiences at the Lab weren’t always positive.”

“Our past culture does not exemplify who we are now, nor who we want to become. We have seen a lot of change in the last few years: we have an entirely new leadership team, including new HR Director and department in 2021; hired about 75 employees since the beginning of the pandemic; and have transformed the demographic make-up of our team. We’ve already seen that our ongoing cultural transformation is creating a better workplace for the team, which leads to better games for our community. I am proud of the work we have done, humbled by the task in front of us, positioned to learn from this experience, and committed to doing better every day.”

There’s plenty more in Kotaku’s full report, which you can read for yourself over here. State of Decay 3 was originally announced in June of 2020, but no release date was given. Sadly, it looks like it may be a while yet before the game sees the light of day.