Undead Labs, the developer behind the State of Decay series, is under the microscope after Kotaku's Ethan Gach shared stories from multiple employees describing an alleged culture of misogyny and negligence that's driven employees away from the studio and delayed development of State of Decay 3.
Gach's reporting covers a long time period that begins with Microsoft's surprise acquisition of Undead Labs in 2018. What followed was a state of affairs that read as especially concerning with Microsoft's ongoing effort to acquire Activision Blizzard. Except it's not a story of a corporate overlord coming in and toxifying a strong company culture, it's about said corporate overlord allegedly not intervening when new studio leadership prevented to stop sexism in the workplace.
Undead Labs was co-founded by ArenaNet co-founder Jeff Strain, who departed the company shortly after its acquisition to spin up a new studio in New Orleans, Louisiana. Strain's involvement in the story mostly has to deal with his exit, and that the leaders he selected to replace him seemed to have not lived up to the standards he established as CEO.
Strain did respond to Kotaku's questions via a Medium Post, if you'd like to read his take on the studio surrounding his departure.
After Microsoft's acquisition, it appears that a number of rank-and-file developers were subject to sexist comments by their co-workers. Meanwhile management was scrambling to keep the development of State of Decay 3 on track, and was apparently not doing so in a healthy fashion.
Philip Holt, the former ArenaNet head of development who was hired in part to replace Strain, is accused by former employees of not picking up where Strain left off, allegedly prioritizing the hiring of friends and colleagues and opening satellite studios in Florida and Illinois (Microsoft did expressly deny this accusation to Kotaku).
Several developers said that Holt allegedly undermined several female directors at the studio by not supporting them and hiring male employees that superseded them in the company hierarchy. Strain did not directly respond to this accusation, and said in a statement to Kotaku that he "recognize[s] that some of our employees, current and former, have shared that their experiences at the Lab weren’t always positive."
He went on to say that he feels the company has improved in its efforts in building a more inclusive environment.
Another key executive that whistleblowing employees took issue with was the first head of people and culture at the studio, Anne Schlosser (Strain does note in his answers that he helped hire Schlosser at the company, but was not involved in her work at Undead Labs).
How was Schlosser allegedly involved in perpetuating sexual harassment at the company? "There was a guy on the State of Decay 3 team who was being blatantly sexist, and Anne didn’t do anything about him," one employee alleged. Others described instances of filing complaints about co-workers to Schlosser, and being rebuffed or told they were the ones at fault.
“What happened on a daily basis at the Lab was the lower-key death by a thousand papercuts version of sexism,” one former developer told Kotaku. “It wasn’t ‘this one interaction was bad,’ it was, more often than not, ‘interactions with specific people were infuriating.’”
Schlosser denied these claims, telling Kotaku that "as a woman whose career has been negatively affected by the kind of toxic misogyny alleged by the source of this article, I would never tolerate or excuse the kinds of behaviors the source allege."
Her statement to Kotaku would further praise the work she did at Undead Labs, and indicate her departure was "part of a planned reorganization."
Somewhere around Schlosser's departure, Microsoft's human resources department apparently stepped in and did review morale at the company. Though Undead Labs implemented new management training in the following months, turnover at the studio apparently continued apace. One employee saying that for every 10 employees departing the company, only one of them "needed to go" (implying they had allegedly been part of the toxic culture).
The remainder of Gach's reporting discusses the scrambled development of State of Decay 3, which sadly sounds familiar in an industry that struggles with managing complex video game projects. Some at the company feel that 2022 will be a year where issues at the company finally "turn a corner," others remain skeptical.
Taking the long view on this story paints a frustrating possible future for employees at Activision Blizzard. Part of impending acquisition's pitch is that Microsoft can apply its corporate standards to the company, and properly combat its alleged culture of toxicity, sexual harassment, and abuse.
But here we have an odd example of Xbox Game Studios purchasing a company, and its team culture getting worse not through corporate malfeasance, but corporate non-interference. We've heard from various studios purchased by Xbox Game Studios over the years that the conglomerate parent has maintained an off-hands approach, and not directly stuck its hands in day-to-day management.
What happens when a new corporate parent doesn't step in when it's needed? Undead Labs appears to be one case where this had a disastrous impact. It's a chilling thought that the same events could proceed at Activision Blizzard, should that acquisition proceed.
We reached out to Microsoft for a statement on Kotaku's story. A spokesperson referred us back to statements made to Kotaku made by multiple employees.