Staff allege toxic culture and mismanagement at State of Decay 3 studio

A new report sheds light on the inner workings of the Microsoft-owned studio behind State of Decay 3, which is facing wide-ranging claims of sexism, bullying, discrimination of marginalized employees, and mismanagement.

Kotaku interviewed a dozen anonymous current and former Undead Labs employees, most of whom alleged a workplace culture that ignored the concerns of women while subjecting them to rampant misogyny. The report details allegations of discrimination against female, non-binary, and other marginalized employees compounded by mismanagement and friction between different teams working on State of Decay 3.

"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. "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]."

According to the interviewees, Microsoft's "hands-off" approach to managing its first-party studios allowed dysfunction and toxic behavior to go unchecked. In a general response to Kotaku's comprehensive report, Microsoft touted the resources provided to all first-party studios, including its own overseeing HR department. "Over the last few years, Undead Labs has seen a number of positive changes and we are confident in the direction the team is taking State of Decay 3, one of our most ambitious open-world games in development."

Undead Labs employees were apparently "shocked" when former studio head Jeff Strain sold to Microsoft in 2018. Current and former employees told Kotaku they felt Strain had "checked out" from daily studio goings on by the time of the acquisition and as State of Decay 2 was gearing for launch. For his part, Strain published a preemptive defense on Medium, saying he "stands by" his leadership, despite admitting that he "had to have some help."

ArenaNet head of development Philip Holt was hired as Undead Labs' chief of staff in February 2019 and then took over as studio head in May 2020. Soon after his arrival, Holt helped bring in the studio's first people and culture boss, Anne Schlosser. Current and former employees told Kotaku that these leadership changes yielded underwhelming, and in some cases counterproductive results in curbing toxicity at the studio. Schlosser left Undead Labs earlier this month.

Employees also alleged pressure from Holt and Microsoft to show off State of Decay 3 before it was ready, in time for the Xbox Games Showcase. "We didn't want to announce the game because we didn't even know what it was at that point," said a current developer. Microsoft told Kotaku participation in the showcase was "optional." 

Notably, it's said the game is still in pre-production despite being announced back in July 2020. Regardless, one current Undead Labs developer expressed some reluctant hope for the game and the future of the studio. "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," they said.

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