To obtain the It Came From Monarch Studios side quest in Dead Island 2, interact with the radio in the Blue Crab during the Beach Offensive story quest. A lady is looking for a friend at Monarch Studios so make your way over there.
Once you arrive, make your way to the Outdoor Stage in the southeastern corner of the area. Head through the gas station under the giant spider then interact with the door to head to the area where you had a boss fight. Clear out the enemies then speak with Sarah on the roof of Emma’s trailer. She’s looking for Sebastian as he’s the only one who knows how to shut up DeeDee. Grab the bag containing DeeDee then make for Sound Stage 3, which is to the southwest.
Clear out the zombies in Stage 3, while protecting the bag. Afterwards, make your way to the crossroad at Stardom Way and Hero’s Journey Lane. Once there, you’ll find Sebastian on the roof but he won’t come down until you clear away all the zombies. After speaking with him, the horde will spawn from the streets to the west. Take them all out then put DeeDee on the table under the scaffolding. Speak with Sebastian to ask him about DeeDee. Afterwards, the quest will complete and you’ll receive a Zombie Axe!