Unknown Worlds founders' lawsuit accuses Krafton of a 'months-long campaign to delay Subnautica 2' so it wouldn't have to pay $250M earnout

As promised last week, the ousted founders of Subnautica 2 studio Unknown Worlds have filed a lawsuit against publisher Krafton, effectively accusing the company of sabotaging the game in an effort to avoid paying a $250 million earnout—and, when that failed, of seizing control of the company outright.

Subnautica was a major hit, and Subnautica 2 appears set to follow in those footsteps, with nearly 2.5 million wishlists on Steam alone and positive responses to playtests. This, the suit alleges, was actually a problem for Krafton.

"It eventually wants the game to drive revenue," the suit states. "But a blockbuster [redacted] launch—squarely within the earnout period—would likely trigger the $250 million earnout to the studio's former owners and employees." The suit further claims that Krafton CEO Changhan Kim told Unknown Worlds leadership that an early access release within the planned 2025 window "would have been disastrous" for the company.

(Multiple references to the original, unannounced 2025 launch target are made in the suit, but redacted as above. Krafton delayed the early access release after firing the studio heads.)

That $250 million payout has been at the center of the dispute between Krafton and the fired Unknown Worlds heads: Subnautica designer and director Charlie Cleveland, CEO Ted Gill, and co-founder Max McGuire. Krafton justified the firings with the claim that Subnautica 2's development has been struggling, and that replacing studio leadership "will bring renewed energy and momentum" to the project.

A week later, details of the massive payout that would result from a successful 2025 Subnautica 2 launch came to light, and when Krafton confirmed Subnautica 2's delay into 2026, it denied that financial considerations played a role in the decision. The next day, things got nasty: Krafton accused Cleveland and co. of effectively abandoning Subnautica 2 prior to being fired, shortly after which Cleveland repeated his insistence that the game is ready for early access release, and promised a lawsuit incoming. And here we are.

The allegations made in this lawsuit are as explosive and ugly as the claims made by Krafton against the former Unknown Worlds leaders. It alleges that troubles began earlier this year, after Krafton leadership reviewed "conservative" financial projections for the studio provided by Gill: The seeming likelihood that the $250 million earnout would be triggered led Krafton to push for a delay of Subnautica 2, the suit claims, and to begin looking for opportunities to terminate the studio founders if they refused.

Beginning in mid-April, "Krafton began a months-long campaign designed to delay Subnautica 2's launch and avoid the earnout," the lawsuit states, including assigning it to a new publishing team in Korea whose vice-president didn't speak English, and pulling resources and services including asset creation—trailers, influencer kits, an audio series, and a cover story with PC Gamer magazine—as well as localization, analytics, and legal support. (PC Gamer can confirm that a planned Subnautica 2 cover story was cancelled.)

"If this were not enough, Krafton then took aim at harming Unknown Worlds’ relationship with its fan community," the suit states. "It seized control of unknownworlds.com and subnautica.com and posted—without consulting the Founders or obtaining their approval—a statement apologizing for Subnautica taking 'far longer than any of us ever intended' and making allegations about Cleveland and McGuire's alleged roles."

Krafton "escalated its intimidation campaign" in June, according to the filing, by accusing the Unknown Worlds founders of failing to fulfill their contractual duties and using "lowball pressure tactics" to get them to accept a lower payout than stipulated in their contract; when the studio founders refused, Krafton threatened to take operational control of Unknown Worlds. After further negotiations in June failed to make headway, that's what happened.

"In short, Krafton flagrantly breached both the letter and the spirit of the promises at the very core of its agreement to purchase Unknown Worlds," the lawsuit states. "It promised to leave creative and operational control in the hands of the Founders. Promise broken. It promised to consult with the Founders before taking any action that could harm the earnout. Promise broken. It promised not to take any action with the primary business purpose of frustrating the earnout. Promise broken. And it promised not to terminate the Founders without Cause. Promise broken."

Subnautica 2 - "Take a Deep Breath" (Gameplay Reveal Teaser) - YouTube

Watch On

That's really the core of the Unknown Worlds' founders complaint: That Krafton meddled in the development of Subnautica 2, took control of Unknown Worlds, and ultimately fired the founders without cause, all in breach of the 2021 Equity Purchase Agreement that saw Krafton acquire the studio. For that, the founders are seeking the full $250 million payout, plus interest and legal fees, as well as an order restoring them to their positions at Unknown Worlds and returning control of the studio to them.

"It’s unfortunate we are here in this situation but we’re doing everything we can to make things right for everyone," Cleveland, the designer and director of Subnautica, wrote in a message posted to Reddit that also includes a link to the full lawsuit. "Openness and transparency is my thing so we’re glad to bring this truth to light."

In a statement provided to PC Gamer, a Krafton spokesperson said the publisher's decisions regarding the game "were made to ensure Subnautica 2 is the best possible game and lives up to fan expectations."

"Releasing the game prematurely with insufficient content, falling short of what fans expect in a sequel, would have both disappointed the players—who are at the heart of everything Krafton does—and damaged the reputations of both the Subnautica and Unknown Worlds brands," the spokesperson said. "While we are disappointed that Charlie, Max, and Ted have filed a lawsuit seeking a huge payout, we look forward to defending ourselves in court. In the meantime, Krafton remains focused on what matters: delivering the best possible game as quickly as possible to Subnautica’s fans."