Former Subnautica Heads Sue Krafton Over Bonus Dispute

The founders of Subnautica 2 studio Unknown Worlds, Charlie Cleveland and Max McGuire, along with former CEO Ted Gill, are suing parent company Krafton. The legal action centers on a contentious dispute surrounding a $250 million bonus.

In a new statement, Cleveland described recent developments as "an explosive and surreal time." He assured fans eagerly awaiting Subnautica 2 that they "all deserve the full story." This marks the latest escalation in a protracted and complex conflict between Unknown Worlds' original leadership and Krafton, the South Korean publisher behind the battle royale giant PUBG.

Krafton acquired Unknown Worlds in October 2021, pledging at the time that the Subnautica studio would retain its independent operation. Last week, however, former Striking Distance CEO Steve Papoutsis was appointed as the new CEO of Unknown Worlds. This surprising announcement confirmed the immediate replacement of the previous leadership team—Ted Gill, Charlie Cleveland, and Max McGuire. In response, co-founder Cleveland expressed his shock at the decision, stating, "after all these years, to find that I’m no longer able to work at the company I started stings." His statement also hinted that while the former leadership believed the game was ready for an early access release, Krafton disagreed.

Earlier this week, reports emerged that Subnautica 2's release was pushed to 2026. This delay occurred just months before Krafton was scheduled to pay a $250 million bonus to the development team. According to Bloomberg, the delay was implemented "against the wishes of the studio’s former leadership." The substantial bonus was contingent on Unknown Worlds meeting specific revenue targets by the end of 2025. With Subnautica 2 not launching this year, achieving those targets is highly improbable, effectively nullifying the bonus payment.

In a statement to IGN, Krafton insisted the delay decision was unrelated to "any contractual or financial considerations." The publisher claimed the move was based on feedback from playtests and that discussions about postponing the launch had begun before Cleveland, McGuire, and Gill were replaced.

Krafton later issued another statement making several allegations against the former leadership. The company claimed it made "multiple requests" for Cleveland and McGuire to resume their roles as game director and technical director, respectively, but both allegedly declined. "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," the statement read. "Krafton believes that the absence of core leadership has resulted in repeated confusion in direction and significant delays in the overall project schedule."

Krafton further stated that it had allocated 90% of the potential $250 million earn-out compensation to Cleveland, McGuire, and Gill, with the remaining 10% designated for the rest of the development team. "Specifically, in addition to the initial $500 million purchase price, we allocated approximately 90% of the up to $250 million earn-out compensation to the three former executives, with the expectation that they would demonstrate leadership and active involvement in the development of Subnautica 2," Krafton alleged.

Cleveland has now confirmed that the former leadership is pursuing legal action against Krafton. He strongly disputed the allegation that they intended to "keep [the earnout] all for ourselves," calling the claim "totally untrue." He did not, however, specify the legal grounds for the lawsuit.

"It continues to be an explosive and surreal time for the Subnautica team and community. None of this is what we wanted. But we truly appreciate the amazing support we’ve gotten from everyone. It means a lot to us, especially now," Cleveland stated.

"As I wrote last week, we know in our souls that the game is ready for Early Access — that’s just how we roll. And we’d like nothing more than for you to play it (game devs live for this). But it’s not currently under our control.

"We’ve now filed a lawsuit against Krafton: the details should eventually become (at least mostly) public — you all deserve the full story," he added. "Suing a multi-billion dollar company in a painful, public and possibly protracted way was certainly not on my bucket list. But this needs to be made right. Subnautica has been my life’s work and I would never willingly abandon it or the amazing team that has poured their hearts into it.

"As for the earnout, the idea that Max, Ted and I wanted to keep it all for ourselves is totally untrue. I’m in this industry because I love it, not for riches. Historically we’ve always shared our profits with the team and did the same when we sold the studio. You can be damned sure we’ll continue with the earnout/bonus as well. They deserve it for all their incredible work trying to get this great game into your hands. Stay tuned."

Fans are now calling for a boycott, urging others not to purchase Subnautica 2 and accusing Krafton of engaging in "shady business practices."

"I don’t know who’s in the right or wrong here, but honestly, what a bizarre business decision to promise that amount of money on that premise," commented one fan. "Maybe Charlie didn’t do anything wrong, but no person is going to resist trying to push out a subpar product that isn’t ready when they’re staring 250 million dollars in the face. If Subnautica 2 wasn’t ready, it was going to be pushed out regardless just to get the money.

"Nobody wins in that situation. Well. Except for the person with lots of money, I guess."

"We are rapidly approaching a ZA/UM level sh*tshow at this point," added another, drawing a comparison to the fallout at Disco Elysium developer ZA/UM, where the studio's leadership similarly experienced a major falling-out, resulting in three different studios now claiming to be developing a "spiritual successor."

"I'm honestly not sure who is in the right here. Both sides have provided pretty damning arguments and I don't think we'll really know until this lawsuit plays out (and possibly not even then)," suggested this player. "That being said, I would love to see if it's just those three asking for money (and screwing over the rest of the team) or if they're including the team in their lawsuit in some respect."

"Krafton is a massive company with an assuredly sizable legal team. I simply refuse to believe that there is anything that could remotely be construed as libel in their statement considering how explicitly clear their statement is," remarked another fan.

"I’m sure the truth is somewhere in the middle but I can’t help but notice that nobody has denied Krafton’s allegations so far. They’re also a large enough company that these guys know they will very much agree to settle for a fraction of the 250 million to make this whole problem go away."

Krafton has yet to comment publicly on Cleveland's latest statement. IGN has requested a comment.