Microsoft's deal to acquire Seattle independent gaming studio Undead Labs is expected to close this month. Undead will remain “almost completely” autonomous, says Matt Booty, the head of Microsoft Studios.
At Undead Labs, a team of 65 is working on small fixes for the video game they released this spring. A couple of collapsed buildings in the post-apocalyptic zombie survival game “State of Decay 2” were inaccessible, and an audio issue needed some tweaking.
It’s pretty much what the team expected to be working on this fall, and not much has changed despite major corporate news announced this June at the E3 video-game convention: Microsoft would buy the independent Seattle video-game studio it had partnered with for eight years. The deal, for an undisclosed amount, is expected to close this month.
Undead will remain “almost completely” autonomous, Matt Booty, head of Microsoft Studios, said last week from Undead’s Pioneer Square offices. Buying Undead partly means cutting through red tape, he said. Rather than having to negotiate a new contract or adjust a deal every time the companies partner on a project, they’ll be able to just talk through details and move forward.
It will also mean that Undead can be part of new features being developed for Xbox’s digital technologies – subscription service Game Pass and live-streaming service Mixer – two businesses Xbox is building to help it advance in a competitive market.
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Xbox announced plans to buy four game studios, Undead included, and create one more of its own during E3 in June. The big expansion of Microsoft Studios is designed to bring more original and exclusive games to the Xbox – an area where Microsoft has made progress, but where competitor Sony excels with its numerous art-house games.
Microsoft has served as Undead’s game publisher since the game studio was formed in 2010.
“Very little will change in terms of the day to day,” Undead CEO Jeff Strain said last week. “I think Microsoft understands, wisely, that creative endeavor is largely a function of culture and passion.”
The Microsoft deal will give Undead more resources to continue building a franchise, Strain said, noting the small studio has already managed to draw millions of loyal followers in the crowded zombie-game arena.
He declined to say if a third “State of Decay” is in the cards, but it seems a possibility. The second version of the game has attracted 3 million players since it was released in May.
Strain, a veteran of game studios Blizzard Entertainment and ArenaNet, said he expects Undead’s 65-person staff will grow over time and remain in its Pioneer Square offices.
Microsoft’s strategy to expand its collection of studios really took off last fall when Xbox chief Phil Spencer was promoted to the Redmond company’s senior leadership team, Booty said. Earlier that year, Microsoft CEO Satya Nadella had publicly thrown his support behind the company’s gaming business, despite questions from some financial analysts about the value of the unit.
“It really makes a statement that gaming is important and that we had bigger ambitions in gaming,” Booty said of Spencer’s new role on the senior leadership team. “It wasn’t just ‘Hey, you’ve made it, now you’ve got a seat at the table.’ It was, ‘Hey, you’ve got a seat at the table, but like the bigger pillars at Microsoft, we expect things to grow.’”
Booty pointed to lessons the company had learned from its $2.6 billion acquisition of Minecraft-maker Mojang in 2014, one of the biggest deals for Microsoft’s gaming business. A big one for him: Keep the acquired company’s teams and cultures intact, and let Microsoft offer resources, not take over.