Krafton sued by ex-leads over Subnautica 2 game dispute

The development of Subnautica 2 has sparked a legal dispute following leadership changes at Unknown Worlds.

Former executives, including co-founder Charlie Cleveland, filed a lawsuit against publisher Krafton over alleged misconduct tied to the game’s delay and employee bonuses.

Krafton replaced the studio’s leadership on July 2, naming Steve Papoutsis as CEO. A week later, the early access release was delayed to 2026 due to feedback from closed testing.

The delay threatens a US$250 million bonus Krafton promised if revenue targets were met by the end of 2025.

Bloomberg reported this went against the former leadership’s wishes.

Krafton claimed the delay stemmed from the former executives abandoning their roles, noting that 90% of the bonus was meant for them.

Cleveland denied this, saying the lawsuit aims to address Krafton’s wrongful actions and affirmed his dedication to the franchise.

Subnautica 2 remains in development with continued support from Krafton.

🔗 Source: The Verge

🧠 Food for thought

1️⃣ Gaming acquisition earnouts create unique tensions between artistic and financial goals

The Krafton-Unknown Worlds dispute illustrates a classic challenge in gaming acquisitions: balancing financial targets with creative development.

When Krafton acquired Unknown Worlds in 2021, it included a substantial $250 million earnout tied to revenue targets by the end of 2025, creating significant financial pressure on development timelines1.

This structure reflects a common industry practice where publishers use earnouts to align developer incentives with financial performance, but it can create tension when creative needs conflict with financial deadlines.

The earnout dispute is significant given Krafton’s current financial success, having just reported record quarterly sales of ₩874.2 billion ($608 million) in Q1 2025, with a 31.3% year-over-year increase2.

This strong financial performance potentially gives Krafton leverage in the dispute, as the company isn’t facing immediate financial pressure that might force a compromise.