Subnautica founders say game got "high marks" from early players before Krafton "orchestrated" a delay to avoid a big payout

A lawsuit from the ousted heads of Unknown Worlds Entertainment offers one side of a $250 million dispute. PLUS: Big changes at Ubisoft involving the CEO's son and Tencent consultants.

Subnautica 2. Screenshot: Unknown Worlds, Krafton

The hotly anticipated underwater survival game Subnautica 2 had received “high marks” during pre-release playtesting that involved “hundreds of real users devoting thousands of hours” to an early version of the game, according to the now-ousted founders of its studio, Unknown Worlds.

That claim is part of a breach of contract lawsuit filed by those former executives against publisher Krafton. The suit was filed in Delaware’s Court of Chancery last week and published with redactions today.

The readiness of Subnautica 2 for an early access launch is central to one of the most incendiary game industry disputes in recent memory.

Publisher Krafton, which purchased Unknown Worlds for $500 million in 2021, fired the studio’s co-founders, Charlie Cleveland and Max McGuire, as well as CEO Ted Gill a little over two week ago. Last week, Krafton said the leaders had neglected Subnautica 2’s development and hurt its readiness for a planned 2025 early access release.

In the suit, the former studio leaders say the game was plenty ready for its release and say they were repeatedly signaled—once directly by Krafton CEO Changhan Kim—that a potential $250 million earn-out, dependent on the game’s success should it release this year (or even in the early 2026) had become a problem for the publisher. This they believe, prompted a push to delay the game.

From the lawsuit:

On May 20, 2025, Cleveland joined Kim (Krafton’s CEO) and some colleagues for lunch. Kim said that if Unknown Worlds released the game on its planned timeline (meaning Krafton would have to pay the earn-out), it could be disastrous financially and hugely embarrassing for Krafton.

Krafton later asserted that Kim never made those statements. Instead, Krafton claimed Kim’s words had been incorrectly interpreted by the translators—an issue that had not arisen in other translated meetings over almost four years.

Krafton declined to comment to Game FIle on the suit, including on that specific claim about the lunch and assertion of mistranslation.

Update - July 17, 2pm ET: A Krafton rep sent me a comment after this story was published. It doesn’t address any specifics of the suit but says that the company’s “decisions were made to ensure Subnautica 2 is the best possible game and lives up to fan expectations.”

The statement continues:

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.

Krafton’s 2021 purchase of Unknown Worlds included a potential payment of $250 million more (10% to the studio’s workers; the rest to the founders, though they say they’d have shared it). The added payment was tied to revenue earned by the end of 2025, with the possibility of extending the earn-out window to mid-2026.

While Krafton said in a public statement last week that Cleveland, in particular, neglected Subnautica 2 to work on movies, the lawsuit unsurprisingly presents a narrative of Cleveland and co. doing what Krafton asked, only for the publisher to abruptly push for a delay. That delay—depending on who you believe—was because the game wasn’t coming together well enough to have a successful 2025 early access launch…or becaause it was going to sell so well that it’d cost Krafton a lot to pay the studio’s potential bonus.