The founders of Unknown Worlds Entertainment have filed a lawsuit against their parent company, KRAFTON, following their recent dismissal and an escalating dispute over Subnautica 2. Charlie Cleveland, Max McGuire, and former CEO Ted Gill are taking legal action after Krafton allegedly delayed the game’s early access release to avoid paying a $250 million performance bonus.
The conflict stems from KRAFTON’s 2021 acquisition of Unknown Worlds for approximately $500 million. The deal included an additional $250 million “earnout” bonus tied to Subnautica 2‘s success and launch timeline. According to sources, the bonus required the game to hit specific revenue targets, partly by releasing into early access before a predetermined deadline.
Tensions mounted when KRAFTON delayed Subnautica 2‘s early access launch. The South Korean publisher claimed the game lacked sufficient content and polish to meet quality standards. In contrast, Cleveland, McGuire, and Gill maintained the game was ready for early access, pointing to the franchise’s established pattern of launching in-development versions that grow with community feedback.
The situation escalated when KRAFTON removed the three leaders from their positions. The publisher cited leadership failures and accused them of neglecting development duties. KRAFTON specifically called out Cleveland for allegedly prioritizing film projects after relocating to Los Angeles. The publisher also suggested the founders intended to keep most of the bonus money for themselves rather than sharing it with the development team.
Cleveland publicly rejected these claims, stating they had always planned to include the team in bonus distributions. He emphasized their successful track record with previous Subnautica releases and argued that KRAFTON was deliberately postponing the game to avoid paying the substantial bonus.
The lawsuit details remain partially confidential, but industry experts believe it will center on whether KRAFTON intentionally delayed the game in bad faith to dodge the $250 million payment. The legal battle could take years to resolve, potentially revealing insider details about the contractual agreements and development challenges.
Subnautica 2‘s future now hangs in uncertainty, with no clear release window. The original Subnautica and its sequel Below Zero both thrived using the early access model, gradually building content while incorporating player feedback. This approach proved highly successful for the underwater survival franchise, which has sold millions of copies worldwide.
Something fishy
The dispute shows the potential headaches when independent studios get bought up by bigger publishers. Performance-based earnouts are common in these kinds of deals to keep top talent around and ensure a smooth transition, but things can get messy when release strategies and quality expectations clash between the game’s creators and their new corporate bosses.
KRAFTON, best known as the company behind PUBG: Battlegrounds, has invested heavily in Western studios to diversify its portfolio. How this high-profile legal battle plays out could affect its reputation among future acquisitions and partners in the gaming industry.
