According to Bloomberg’s Jason Schreier, Unknown Worlds founders Charlie Cleveland and Max McGuire are filing a lawsuit against Krafton, alongside former CEO Ted Gill. “Much more to come in the next few days,” he writes.
The cold war of words between Subnautica 2 publisher Krafton and the recently ousted leadership of developer Unknown Worlds got very hot today as Krafton issued a statement accusing the former studio heads of effectively abandoning the project, resulting in “repeated confusion in direction and significant delays in the overall project schedule.”
Krafton, best known as the publisher of PUBG, acquired Subnautica developer Unknown Worlds in 2021 for $500 million. In addition to that, Krafton put another $250 million in “earn-out compensation” on the table—essentially bonuses for achieving certain targets or milestones—90% of which were allocated to Subnautica designer and director Charlie Cleveland, CEO Ted Gill, and co-founder Max McGuire, the studio heads who were fired earlier this month, “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,” Krafton wrote. “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.
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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 said Subnautica 2 development has suffered from “repeated confusion in direction and significant delays in the overall project schedule,” which it pinned on an “absence of core leadership” at Unknown Worlds. It also says the current version of the game “falls short of content volume,” which is what forced the recently confirmed delay into 2026.
“We are deeply disappointed by the former leadership’s conduct,” Krafton wrote, “and above all, we feel a profound sense of betrayal by their failure to honor the trust placed in them by our fans.”
That’s a shockingly harsh thing to say in a corporate press release, and effectively confirms serious behind-the-scenes beef over Subnautica 2 that’s previously only been hinted at. Krafton said when the Unknown Worlds bosses were shown the door that incoming CEO Steve Papoutsis, formerly the head of Callisto Protocol developer Striking Distance Studios, would “bring renewed energy and momentum” to the project; it later promised that “the team that has been working on the game day-to-day over the last few years remains completely unchanged,” obliquely suggesting that Cleveland, Gill, and McGuire had not been working on it regularly.
Shortly thereafter, Cleveland defended the work on Subnautica 2, saying that the game in its current state “is ready for early access release.” Nonetheless, a delay into 2026 was announced a few days later; there was some speculation that Krafton pushed the release in order to avoid that $250 million payout, but the publisher said the decision “was not influenced by any contractual or financial considerations.”
Krafton also seemed to promise some sort of makeup for that missed bonus payout in today’s statement, saying it 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.”
What exactly that works out to remains to be seen: A Bloomberg report said the dismissed studio leadership had planned to share the full $250 million bonus with all of the estimated 100 employees at Unknown Worlds, which could mean a massive reduction in payouts if Krafton only allocates the 10% they were originally due to get. A Krafton spokesperson said further details on that will be revealed in the future.
The statement has touched off some back-and-forth on the Subnautica subreddit, where some are inclined to accept Krafton’s explanation (Subnautica 2 has been a long time coming, after all) and others standing behind the former Unknown Worlds leaders who headed up the first Subnautica, which was nothing short of brilliant. For now, though, only two things are certain: Bad blood is boiling, and it’s not likely to be over anytime soon.
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