The battle between KRAFTON and Subnautica 2 developers Unknown Worlds, has escalated even further, as the lawsuit filed by Unknown Worlds’ co-founders, Charlie Cleveland, Max McGuire, and Ted Gill is now unsealed, revealing the full details regarding why the co-founders are suing KRAFTON for a breach of contract.
If you want to get a recap on what’s happened so far, you can check out a bullet point list here that goes through all the events in this saga so far. Today’s story comes from the fact that the lawsuit the co-founders filed is now available to read in full, if you’re so inclined.
Some key context, if you’ve not been following this story, is that when Unknown Worlds was acquired by KRAFTON in 2021, it did so for $500 million, with an additional $250 million to be paid out as a bonus to the studio if it hit certain revenue targets by the end of 2025. On paper, the three co-founders and 40 employees at Unknown Worlds were due to receive a portion of that bonus, with the co-founders receiving the bulk of it. The co-founders also stipulate that they would have spread the wealth even further to the other members of the team who were not due to receive the bonus on paper.
According to the co-founders, Unknown Worlds’ relationship with KRAFTON only started to deteriorate when KRAFTON realized that Subnautica 2 launching in early access by the end of this year would have meant the studio hitting and surpassing the revenue targets required to unlock the $250 million bonus.
The suit even adds that KRAFTON’s chief executive officer, Changhan Kim, admitted to the Unknown Worlds co-founders that if Subnautica 2 was released in early access in 2025, and Unknown Worlds hit its revenue targets to unlock the $250 million bonus, “it could be disastrous financially and hugely embarrassing for KRAFTON.” The company now denies that Kim made such an admission, and blames it on translators misinterpreting Kim’s words, despite that never being an issue previously.
“So KRAFTON engaged in a months-long campaign to delay Subnautica 2’s release,” the suit reads. “It pulled key marketing materials, refused to follow through with crucial partnerships, and reneged on long-standing commitments to handle important pre-launch tasks. Multiple KRAFTON employees themselves suggested that these moves were for the purposes of frustrating the earnout, despite the earnout agreement’s prohibition on taking actions for that purpose.”
Unknown Worlds would not be swayed by these sabotage measures, and members of the studio took it upon themselves to do the things its publisher, KRAFTON, should have been doing. It’s at this point where we catch up to the events that began on July 2, with the three co-founders being fired.
“In flagrant disregard of the parties’ contract, KRAFTON terminated without cause three former owners of Unknown Worlds – Charles Cleveland, Adam “Max” McGuire, and Edward “Ted” Gill (the “Founders”) – and seized control of the company. KRAFTON’s first decision upon taking over? To delay the launch of Subnautica 2 until sometime in 2026. That way, KRAFTON could keep the game’s revenue for itself, while avoiding the $250 million earnout it would likely have owed the Founders and other Unknown Worlds employees.“
The lawsuit also attacks claims made by KRAFTON, which previously claimed that Cleveland and the other co-founders had “abandoned” their roles at Unknown Worlds in order to work on a “personal film project.” According to the suit, the co-founders were working on a film. A Subnautica movie, that KRAFTON had asked the co-founders to work on.
It further attacks claims made by KRAFTON that Subnautica 2 was not ready for early access launch. In the milestone review documents that were leaked and subsequently confirmed to be real by KRAFTON, the publisher claims that Subnautica 2 was lacking content, and that based on player feedback from internal playtests, it had to be delayed into 2026.
According to the co-founders’ lawsuit, the ‘experts’ KRAFTON hired to deem Subnautica 2 as unfit weren’t experts at all and had no experience developing and releasing early access titles. The co-founders also flat-out disagreed with the assessment of player feedback from the internal playtests, saying that the feedback in fact “unequivocally proved” that Subnautica 2 was ready to launch.
The lawsuit also alleges that the statement made on the Unknown Worlds website confirming the delay of Subnautica 2 was written by KRAFTON, after the publisher took control of the site and published without the knowledge of anyone at Unknown Worlds.
“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. 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…In the name of its bottom line, KRAFTON has thrown its promises out the window and ripped the game from the hands of both its creators and its community.”
KRAFTON now has the task of trying to argue against these claims. We’ll continue to update you on this story as more details become public and as KRAFTON tries to fire back.
