The battle between Subnautica 2 publisher Krafton and the three former executives at its developer Unknown Worlds continues. Ted Gill, Charlie Cleveland, and Max McGuire — the three executives who Krafton terminated earlier this year — have filed a lawsuit detailing the alleged attempts by Krafton to torpedo the early access release of Subnautica 2 with the express purpose of avoiding paying a promised earnout bonus of $250 million. 

“Krafton’s actions have already severely damaged fan anticipation and undermined the potential release of Subnautica 2,” the lawsuit says.

That earnout was promised by Krafton to the former executives and roughly 100 developers and was to be paid should Unknown Worlds hit revenue goals by the end of 2025. Subnautica 2, slated for early access release sometime in late 2025, would have all but assured those goals were met. 

According to the lawsuit filed today  in a Delaware chancery court, Krafton also knew Subnautica 2 was on track to meet if not exceed the revenue target to trigger the payout and began to take steps to essentially prevent that. The original Subnautica, an underwater survival adventure game, was a critical and commercial success, and its sequel has become the second most wishlisted game ever on Steam.  

The lawsuit details a meeting between Krafton’s US and Korean employees concerning the marketing strategy for Subnautica 2. After that meeting, Krafton’s US employees, who worked closely with the Subnautica 2 team, reported that Kafton’s attitude about the game had changed. 

“Upon their return, the El Segundo team—Krafton employees—reported to Gill that Krafton’s leadership was not focused on a successful launch, but instead on how it could convince Unknown Worlds to delay the game.”

The lawsuit additionally states that Krafton’s US employees explicitly revealed to the Unknown Worlds founders that “Krafton’s legal team was combing through the agreements looking for any opening to terminate the Founders if they proceeded with the planned release.”

The lawsuit provided the details of the deal in which Krafton purchased Unknown Worlds back in 2021. The lawsuit says that part of that deal was an agreement that the founders would maintain control of the company and the release schedule of Subnautica 2, while Krafton could not impede the game’s development nor fire Unknown Worlds’ founders without cause.

According to the lawsuit, Krafton launched a campaign to do both. Krafton allegedly failed to follow through on several of its development responsibilities for Subnautica 2 including pulling marketing and localization support. “Indeed, one of Krafton’s El Segundo publishing employees reported to Gill that Krafton Headquarters told all Krafton teams to stop all creative tasks related

to Subnautica 2.”

The lawsuit claims that Krafton took these obstructionist actions to delay the game to explicitly avoid the $250 million payout. At a meeting between Krafton CEO Changhan Kim and Charlie Cleveland, Kim allegedly stated that, “if Unknown Worlds released the game on its planned timeline […], it could be disastrous financially and hugely embarrassing for Krafton.” Krafton declined to comment.

After the initial story broke regarding the alleged reason for Subnautica’s delay, Bloomberg reported that Krafton agreed to extend the timeline for the earnout to account for Subnautica 2’s later release. Previously, the company denied that it delayed Subnautica 2 for any other reason but to polish the game. Earlier this week, an internal document regarding Subnautica 2’s development were leaked on Reddit. The document, consisting of two pictures taken of a computer screen, outlined the content originally planned for the game’s early access launch and how some material had to be changed or removed to meet the release date. 
Krafton acknowledged the veracity of those documents saying, “Given these circumstances, Krafton has determined that transparent communication is necessary and has chosen to confirm the authenticity of the document,” possibly to bolster its argument that Subnautica 2 was not ready for its early access release.

Subnautica 2 has been at the center of a contentious debate between leadership at its developer Unknown Worlds and the game’s publisher, Krafton Games. At stake is a $250 million payout, promised to Unknown Worlds if the studio hit certain revenue targets by the end of this year. But a company shakeup and the subsequent delay of Subnautica 2 has rocked the studio and potentially imperiled the promised payout, and now one of Unknown World’s fired founders says they’re suing.

On July 2nd, Krafton announced that Steve Papoutsis, CEO of The Callisto Protocol developer Striking Distance Studios would be taking over as the CEO of Unknown Worlds, replacing the current leadership of Ted Gill, Charlie Cleveland, and Max McGuire with immediate effect. 

The following week, on July 9th, Unknown Worlds announced that early access for Subnautica 2 would be delayed to 2026. According to the announcement, Subnautica 2 was in good shape, but closed testing revealed “some insight that there are a few areas where we needed to improve before launching the first version of Subnautica 2 to the world.” 

That same day, Bloomberg’s Jason Schreier reported that this delay was against the wishes of Unknown Worlds’ former leadership and that there were serious financial implications for this delay. According to Schreier’s report, when Krafton purchased Unknown Worlds, in 2021 it promised a $250 million bonus to the studio if it hit revenue targets by the end of 2025. Schreier’s reporting also indicated that the bonus was planned to be shared among the studio’s roughly 100 employees with some being promised bonuses in the seven figures. 

With Subnautica 2’s delay, those revenue targets will likely not be hit, and those bonuses not paid out. In a statement to Bloomberg, Krafton said the delay was only to improve Subnautica 2’s quality, and it’s possible to envision a situation where Krafton delayed the game in order to get out of paying out the bonus.

However, Krafton has issued a new statement that seemingly throws cold water over this interpretation. The statement says that Krafton had “allocated approximately 90% of the up to $250 million earn-out compensation to the three former executives” with the “expectation” that the executives would “demonstrate leadership and active involvement in the development of Subnautica 2.” The statement then accuses the ousted leadership of essentially abandoning development on the game while affirming “fair and equitable compensation for all remaining Unknown Worlds employees.”

Later on Thursday, Unknown Worlds co-founder (and Subnautica director) Charlie Cleveland responded to these accusations by saying he’s filed a lawsuit. “As for the earnout, the idea that Max, Ted and I wanted to keep it all for ourselves is totally untrue,” he writes. “Historically we’ve always shared our profits with the team and did the same when we sold the studio.”

We’ve asked for a copy of the legal complaint.

Here are Krafton and Cleveland’s statements in full. You can also see them on Krafton’s website and on Cleveland’s blog.

Krafton:

To Our 12 Million Fellow Subnauts,

—  Inevitable Leadership Change Driven by Project Abandonment–Despite Holding 90% of Earnout for Themselves

First and foremost, we sincerely thank you for your continued support, passion, and unwavering dedication to Subnautica. We wish to provide clarity on the recent leadership changes at Unknown Worlds, a creative studio under KRAFTON.

Background of Leadership Change 

KRAFTON deeply values Subnautica’s unique creativity and immersive world-building. To provide fans with even better gaming experiences, we acquired Unknown Worlds, fully committed to supporting Subnautica’s future success. We collaborated closely with the studio’s leadership, who were central to the creation of the original Subnautica, to foster the optimal environment for a successful Subnautica 2.

Specifically, in addition to the initial $500 million purchase price, we allocated approximately 90% of the up to $250 million earn-out compensation to the three former executives, with the expectation that they would demonstrate leadership and active involvement in the development of Subnautica 2.

However, regrettably, the former leadership abandoned the responsibilities entrusted to them. Subnautica 2 was originally planned for an Early Access launch in early 2024, but the timeline has since been significantly delayed. KRAFTON made multiple requests to Charlie and Max to resume their roles as Game Director and Technical Director, respectively, but both declined to do so. In particular, following the failure of Moonbreaker, KRAFTON asked Charlie to devote himself to the development of Subnautica 2. However, instead of participating in the game development, he chose to focus on a personal film project.

KRAFTON believes that the absence of core leadership has resulted in repeated confusion in direction and significant delays in the overall project schedule.
The current Early Access version also falls short in terms of content volume.
We are deeply disappointed by the former leadership’s conduct, and above all, we feel a profound sense of betrayal by their failure to honor the trust placed in them by our fans.

KRAFTON’s Full Support for the Dedicated Development Team 

To uphold our commitment to provide you with the best possible gaming experience, we made the difficult yet necessary decision to change the executive leadership. Subnautica 2 has been and continues to be actively developed by a dedicated core team who share genuine passion, accountability, and commitment to the game. We deeply respect their expertise and creativity and will continue to provide full and unwavering support, enabling them to focus solely on delivering the exceptional game you deserve.

KRAFTON’s Commitment to its Promises in Rewarding Employees 

Additionally, KRAFTON has committed to fair and equitable compensation for all remaining Unknown Worlds employees who have continuously and tirelessly contributed to Subnautica 2’s development. We believe that the dedication and effort of this team are at the very heart of Subnautica’s ongoing evolution, and we reaffirm our commitment to provide the rewards they were promised.

Fans will always remain at the center of every decision we make at KRAFTON. Moving forward, we promise transparent communication and continued efforts to sustainably develop and expand the beloved Subnautica universe.

Honoring your trust and expectations is a core tenet at KRAFTON. We are committed to repaying your patience with an even more refined and exceptional gaming experience.

Cleveland

Hello everyone,

It continues to be an explosive and surreal time for the Subnautica team and community. None of this is what we wanted. But we truly appreciate the amazing support we’ve gotten from everyone. It means a lot to us, especially now.

As I wrote last week, we know in our souls that the game is ready for Early Access – that’s just how we roll. And we’d like nothing more than for you to play it (game devs live for this). But it’s not currently under our control.

We’ve now filed a lawsuit against Krafton: the details should eventually become (at least mostly) public – you all deserve the full story. Suing a multi-billion dollar company in a painful, public and possibly protracted way was certainly not on my bucket list. But this needs to be made right. Subnautica has been my life’s work and I would never willingly abandon it or the amazing team that has poured their hearts into it.

As for the earnout, the idea that Max, Ted and I wanted to keep it all for ourselves is totally untrue. I’m in this industry because I love it, not for riches. Historically we’ve always shared our profits with the team and did the same when we sold the studio. You can be damned sure we’ll continue with the earnout/bonus as well. They deserve it for all their incredible work trying to get this great game into your hands.

Stay tuned.

-Charlie

Update, July 10th: Added Cleveland’s response.

Grab your grill, your hot dogs, and your sparklers because it's time to celebrate… Summer Games Done Quick 2025. The annual speedrunning charity marathon benefitting Doctors without Borders is back starting July 6th and finishes July 12th. Here's how and most importantly what to watch as you enjoy the reason for the speedrunning season.

Summer Games Done Quick 2025 starts on Sunday July 6th at 1:30 PM ET on Twitch. Games Done Quick's YouTube channel will have VODs up typically within a few short hours after the run completes so don't worry if you miss anything live. There's interesting runs every day during primetime so always check the sc …

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Infinity Nikki’s next update will add some major new features. Bubble Season starts April 29th and will include a new area, new activities, and, of course, new (and returning) outfits. But the biggest addition is one that fans have been asking for since launch: co-op. Check out the trailer above.

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Speaking of wardrobe, Infinity Nikki is catching up to the MMO girlies by implementing a new dye system. In Bubble Season, players will be able to use dyes to change the color of their outfits the same way one can in World of Warcraft and Final Fantasy XIV. No word on exactly how dyes will work or if they will be yet more things to spend your precious currency on. But I am interested in the potential of getting new colors for my clothes without the hassle of the current system, which involves the expensive and time consuming process of collecting duplicate outfits.

Bubble Season starts April 29th and if you’re one of the folks waiting for the game to come to PC, the Steam version of Infinity Nikki launches that day too.

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Blue Prince is an architectural puzzle mystery game from developer Dogubomb. In it you play as a young man who inherits his uncle’s magical mansion. On your first day at the house you receive a note laying out the rules by which you will earn your inheritance. This house has 45 rooms. Find the secret 46th room that’s not displayed on any of the mansion’s blueprints (get it, Blue Prince / blueprints) and the house is yours. 

To find the 46th room you must create or “draft” rooms one after the other connecting them via their doors. You start each day with 50 steps and passing into a room takes one step (or more depending on the type of room). When you run out of steps y …

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