Krafton has issued a response to a recent lawsuit filed by the former leads of Subnautica 2, offering rebuttals to the developers’ claims and alleging they “resorted to litigation to demand a multimillion-dollar payout they haven’t earned.”
This comes in reply to a legal complaint filed by former Unknown Worlds CEO Ted Gill, and fellow co-founders Charlie Cleveland and Max McGuire, last month. In it, the former leads alleged that Krafton went out of its way to hinder Subnautica 2’s development, delay the game, and ultimately fire them from their roles all in an effort to stop them and other employees from collecting a $250 million bonus payment that would have kicked in if the game’s early access released on time later this year and reached certain sales milestones.
In its response, Krafton says the game was planned for a Q1 2024 release. However, “Cleveland and McGuire abandoned their roles as studio-wide Game Director and Technical Director to focus on their personal passion projects and quit making games for Unknown Worlds entirely. And Gill, who remained, focused on leveraging his operational control to maximize the earnout payment, rather than developing a successful game.”
Krafton goes on to allege that by 2023, Unknown Worlds’ development director had commented on the founders being “checked out,” and that Cleveland in particular had stated publicly he had abandoned video games to pursue filmmaking. The release date of Subnautica slipped to 2024 and then 2025. “An internal assessment of the first playable in March of 2024 made clear that the team had failed to deliver on their promise of developing sufficiently new content. But rather than roll up their sleeves and make the game they had promised, the Key Employees blamed others and overhauled the team.” Krafton also says that the leads continued reducing the scope of the game over time.
The response says that by spring 2025, Krafton was trying to stop them from releasing the game, saying it was not ready. However, Krafton alleges the leads tried to release it anyway in order to get their maximum earnout.
“Krafton, fearing how an underbaked EA Subnautica 2 would be received by both existing fans and the broader market, urged Cleveland and McGuire to return to their posts to generate a market-ready product that would not disappoint fans. Cleveland and McGuire declined. In response to Krafton’s request for the Key Employees to return to lead the development of Subnautica 2, Gill stated that ‘[t]here’s no coming back to a job they didn’t have.'” Krafton further alleges that the leads said they would self-publish the game without Krafton, and that they downloaded “massive amounts of confidential information” from Unknown Worlds.
The Key Employees’ insistence on releasing the game immediately was singularly driven by self-interest in obtaining the earnout. At every turn during development, the Key Employees were laser focused on avoiding “a timeline that doesn’t tank the earnout opportunity” and scheduling the release to maximize their payments. Conversations throughout the post-acquisition period make clear the Key Employee’s [sic] focus was on their payday, and not on the game. As early as 2022, an employee who was due to receive a portion of the earnout stated that despite the significant delays in the game, he was confident “Ted [Gill] will concoct a scheme to get us that earnout.” [emphasis Krafton’s]
The response goes on to issue answers to every claim in the founders’ lawsuit, paragraph by paragraph. Krafton asks the court to rule in its favor, deny the founders’ claims for relief, and award Krafton costs, including attorney fees.
This saga began in July, when Krafton seemingly out of the blue announced it would replace Unknown Worlds’ leads with former Striking Distance CEO Steve Papoutsis. In the weeks that followed, reports emerged surrounding the $250 million bonus promised to staff amid questions as to whether that payout would be honored. While the Subnautica leads claimed in various statements and in their lawsuit that Krafton had tried to delay Subnautica 2 and ultimately fired them to avoid paying them the bonus, Krafton accused them of neglecting their duties, saying Subnautica 2 was not ready to launch. That final claim remains up in the air, with leaked documents since verified by Krafton confirming that Unknown Worlds was receiving feedback from the publisher that the game was not ready for early access launch. However, a report from Bloomberg suggests this may not have been wholly true.
Rebekah Valentine is a senior reporter for IGN. You can find her posting on BlueSky @duckvalentine.bsky.social. Got a story tip? Send it to [email protected].
