Krafton argues Unknown Worlds’ ex-leaders shouldn’t be reinstated

Krafton, a Korean game publisher, told a Delaware court that former leaders of its US-based studio Unknown Worlds should not be reinstated, arguing they had disengaged from their roles before being dismissed.

The trial followed a lawsuit by Charles Cleveland, Max McGuire, and Ted Gill, who accused Krafton of delaying Subnautica 2’s release to avoid up to US$250 million in earnout payments tied to performance milestones.

Court records showed internal messages and journal entries suggesting the former leaders described themselves as burned out and considered leaving the company.

Krafton said the delay in Subnautica 2’s early access, now expected next year instead of late 2024, was to improve game quality, not to avoid payments.

Unknown Worlds, acquired by Krafton for US$750 million in 2021, is known for the Subnautica and Natural Selection franchises.

The court is set to issue a ruling after a posttrial hearing on Jan. 9, 2026.

🔗 Source: The Korea Herald

🧠 Food for thought

Implications, context, and why it matters.

Earnout milestones and timing decide whether Krafton owes $250M

This lawsuit centers on a $250 million earnout tied to Subnautica 2’s paid early-access launch. After a public shift from late 2024 to 2025, plaintiffs say the target moved again to 2026 1.
Co-founders Charles Cleveland, Max McGuire, Ted Gill allege Krafton ran a delay campaign from mid-April 2025 1. They say the company pulled asset creation, trailers, localization support (adapting content for different languages and regions).
CEO Changhan Kim said a 2025 release would sell but lacked “freshness,” which could disappoint fans 2. Internal messages quote him worrying that paying the earnout could lower the studio’s value 3.
Absent the 2021 acquisition agreement’s milestone definitions and timing windows, investors and buyers cannot judge if delay defeats the earnout or if the quality rationale fits normal business judgment.

Delaware earnout litigation creates demand for contract monitoring tools

Delaware courts face more earnout fights, with rulings that awarded sellers over $1 billion for breaches of efforts provisions (clauses that require a stated level of effort to hit milestones) 4.
Judges gauge “commercially reasonable efforts” against outward-facing benchmarks such as actions of similarly situated peers 4.
Legaltech platforms (software for legal workflows) that track milestone compliance in real time and flag likely breaches could ease post–mergers and acquisitions (M&A) friction for gaming or tech buyers.
Founders can tune analytics to common Delaware clauses like “best efforts” versus “commercially reasonable efforts” to catch deprioritization when a project gets pushed down the internal list 4.