The founders of the Subnautica franchise have filed a lawsuit against Krafton after the parent company fired the top three leaders of Unknown Worlds, the maker of Subnautica, the undersea survival game that has more than 12 million players to date.
Those leaders were in a midst of developing Subnautica 2, but Krafton also announced it was delaying early access due to lack of progress. Then it removed them from control of the company. As shareholders, they’re suing for “Krafton’s desperate efforts to avoid paying the earnout, and its flagrant contractual breaches in pursuit of that goal.”
In the latest salvo, the fired leaders Charlie Cleveland (cofounder), Max McGuire (cofounder), and Ted Gill (CEO) filed the lawsuit against Krafton, alleging that it did so to avoid paying a $250 million bonus to them.
They were replaced by another executive, Steve Papoutsis, who did an interview with me. We have a more complete version of our interview with Papoutsis on GB MAX. But the basic news is in this post.
The original Subnautica came out in 2018, and it was a smash hit. That prompted South Korea’s Krafton in 2021 to acquire Unknown Worlds for $250 million, plus a $250 million bonus for those top three leaders. That $250 million was supposed to be paid if the second game hit early access in 2025. But upon firing the leaders, Krafton said that Subnautica 2 would not come out until 2026, based on a review of its progress.
In response to the lawsuit, Krafton said, “Krafton’s decisions were made to ensure Subnautica 2 is the best possible game and lives up to fan expectations. Releasing the game prematurely with insufficient content, falling short of what fans expect in a sequel, would have both disappointed the players — who are at the heart of everything Krafton does — and damaged the reputations of both the Subnautica and Unknown Worlds brands. While we are disappointed that Charlie, Max, and Ted have filed a lawsuit seeking a huge payout, we look forward to defending ourselves in court. In the meantime, Krafton remains focused on what matters: delivering the best possible game as quickly as possible to Subnautica’s fans.”
And now Krafton said that, based on internal assessment so far, Cleveland (who often said he was working AI films in recent weeks on Twitter/X) and McGuire have had minimal–to-no involvement in the development of Subnautica 2. And Krafton said that the Subnautica 2 development team remains intact and is actively continuing its work.
And Krafton said today, “To ensure the existing development team stays focused and committed, Unknown Worlds has restructured the previous incentive system. In addition to the existing earn-out, a new incentive program has been introduced to provide further motivation and reinforce trust in the team.”
Krafton said that, currently, Subnautica lacks sufficient volume and features to be considered ready for early access now. Progress has fallen short of initial expectations. In accordance with a quality-first approach, timelines are being adjusted to better align with the goals.
Continuing open development process
Papoutsis, the new CEO of Unknown Worlds, said in our interview he was just coming up to speed on the studio, but he wanted to continue the open development process that the company has done with fans in the past. And he said no one else from the staff has yet chosen to leave the Unknown Worlds studio.
“The commitment to open development is something I find truly inspiring,” Papoutsis told me. “I haven’t had the chance to work on a project developed the way Subnautica has been—with such openness and transparency. I’m genuinely excited to be part of that journey with the team and to engage directly with the community as we all work together to help shape the best game possible.”
Papoutsis declined to comment on potential litigation. The former Subnautica 2 studio leaders said they planned to file a lawsuit. Papoutsis said he had never crossed paths with Charlie Cleveland, or Max McGuire before, but had spoken to Ted Gill on several occasions.
Cleveland’s response
Cleveland’s true response will likely be in a lawsuit, most likely. But in a post on Reddit, Cleveland said the following:
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.
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. 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.