After being fired this month, Krafton studio founders have filed a suit alleging Krafton has breached contract in the name of profit to delay Subnautica 2.
For the uninitiated, on July 2nd, the founders of Unknown Worlds were fired by Krafton after the publisher alleged Ted Gill, Charlie Cleveland, and Max McGuire abandoned their responsibilities on Subnautica 2 which led to “repeated confusion in direction and significant delays” as reported by Kotaku. Those fired founders have now banded together to slam Krafton with a lawsuit that claims the publisher is in breach of their initial agreement when Krafton purchased Unknown Worlds back in October 2021.
The lawsuit (posted by Aftermath) explains the founders signed a deal that “involved a $500 million up front payment, plus an earnout that could reach $250 million depending on Unknown Worlds’ performance through 2025” adding that Krafton’s decision to fire the studio’s founders and delay the title’s early access out of 2025 a decision that is based purely on greed.
The lawsuit directly conflicts with Krafton’s statements on July 2nd, when they shared Unknown Worlds’ founders were replaced by Steve Papoutsis (who is serving as Striking Distance Studios CEO) due to Krafton’s initial claims the founder trio ‘abandoned’ the project. On July 9th, Krafton pushed Subnautica 2‘s early access release window out of 2025 and into 2026. According to the delay announcement, Subnautica 2 was in good shape (which the founders corroborated), but Krafton said closed testing revealed “some insight that there are a few areas where we needed to improve before launching the first version of Subnautica 2 to the world,” and that pushed the game into 2026.
The former studio executives now claim this was done strictly in the name of profit, $250 million in profit. The lawsuit filed by Unknown Worlds co-founders says “Krafton’s actions have already severely damaged fan anticipation and undermined the potential release of Subnautica 2,” adding the decision to fire the studio executives was designed to strip Unknown Worlds of their autonomy, allowing Krafton to delay the title which was (according to the original contract) only Unknown Worlds’ decision to make.
The lawsuit continues by saying “Krafton flagrantly breached both the letter and the spirit of the promises at the very core of its agreement to purchase Unknown Worlds,” the damning lawsuit alleges Krafton broke every single promise they made when signing their publishing agreement with Unknown Worlds. Ultimately, the lawsuit concludes with “Krafton knew that allowing the Founders to launch Subnautica 2 as planned would generate enormous commercial success and require Krafton to pay the $250 million earnout. By firing the Founders and delaying the launch, Krafton can capture (what’s left of) the game’s commercial success without paying the Unknown Worlds team a penny of the earnout.”
It’s worth mentioning that this entire legal saga goes against everything Krafton claimed when it acquired Hi-Fi Rush in September 2024. Krafton’s CEO Changhan ‘CH’ Kim explained, “Tango Gameworks are creative. They want to try something new, and we want to do more of that,” and their decision to purchase Tango Gameworks was one based on “legacy, not profit.”
While this messy legal battle plays out, Subnautica 2 is still scheduled to release its early access period sometime in 2026.
UPDATE July 18, 2025:
We received a comment from KRAFTON PR, “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.”
