Subnautica 2 publisher Krafton is accusing Unknown Worlds founders Charlie Cleveland, Max McGuire, and CEO Ted Gill of “resort[ing] to litigation to demand a multimillion-dollar payday they haven’t earned,” according to the company’s response to the former executive’s lawsuit. That lawsuit, filed in July, accused Krafton of intentionally obstructing development of Subnautica 2. Now, Krafton says the founders took the company to court “rather than investing the effort necessary to meet the earn-out conditions they freely negotiated.”
Worse than the multimillion-dollar payday, they say, the former executives are looking for their jobs back — “to roles and positions they abandoned years before they ever filed this action.”
The former Unknown Worlds executives filed the original complaint in the Delaware Chancery Court in July after Cleveland, McGuire, and Gill were fired and Subnautica 2 was delayed. The dispute quickly became messy before the lawsuit was filed and after Bloomberg reported that Unknown Worlds leadership intended to share a milestone bonus with the team that was called off with the game’s delay. Krafton has since extended the schedule for a “potential bonus payout,” per a Bloomberg report.
Krafton’s response, filed earlier in August and of which a redacted version was obtained by Aftermath, is the company’s official legal response to the lawsuit. It lays out Krafton’s defense, beginning with the “equity purchase agreement” that Krafton signed with Unknown Worlds in 2021, when Krafton paid $500 million “in exchange for 100% of Unknown Worlds’ outstanding shares.” The purchase agreement also laid out the plan for up to $250 million in Subnautica 2 met certain milestones before June 2026. Krafton says in the response that Cleveland, McGuire, and Gill “quickly lost interest in developing Subnautica 2” after being paid for their part of the sale — $200 million each for Cleveland and McGuire, and $60 million to Gill.
“Cleveland and McGuire abandoned their roles as studio-wide Game Director and Technical Director to focus on their personal passion projects and quit making games for Unknown Worlds entirely,” Krafton writes. “And Gill, who remained, focused on leveraging his operational control to maximize the earnout payment, rather than developing a successful game.”
Unknown Worlds published its breakout hit, Subnautica, in 2018. The underwater survival game has the player acting as a diver exploring an alien ocean after a crash. The player is tasked with surviving the harsh environment by finding resources and exploring the unknown ocean world — and, hopefully, escape. A spin-off, Subnautica: Below Zero, was released in May 2021 before Subnautica 2 was announced in 2024. There was no public release date for Subnautica 2 to be released in early access, but it was expected for 2025. Subnautica 2 was officially delayed into 2026 in a notice on the Unknown Worlds website on July 9; days before, Krafton announced that Cleveland, McGuire, and Gill had left the studio and Striking Distance CEO Steve Papoutsis had taken over Unknown Worlds. Then, it got messy.
The former executives painted Krafton as a greedy company that sabotaged Subnautica 2’s development to keep from paying out hundreds of millions in bonus payments, while Krafton is accusing the former Unknown Worlds leadership of taking the money and running. Krafton says that an unnamed development director at Krafton that people at the studio believe Cleveland and McGuire had checked out. (Krafton says Cleveand pursued filmmaking, something he alleged was at the behest of Krafton, while McGuire allegedly took more personal projects. Gill, Krafton writes, “condoned and sit idly by this conduct.) Krafton alleges it asked the executives to return to their duties to prevent further delays, but says that they “refused, irresponsibly stating that the project would be better off with smarter, more capable people.”
Krafton says in the document that it had to fire the three executives “to prevent [them] from permanently damaging Unknown Worlds’ most valuable IP, the Company itself, and its goodwill with its fans.” (Krafton points to Kerbal Space Program 2 multiple times as an example of irreversible harm to a franchise. Kerbal Space Program 2 was published in early access in 2023 by Private Division, following the successful Kerbal Space Program from 2015. Per a PC Gamer report from 2023, Kerbal Space Program 2 was “too early access for early access.”) Their behavior, Krafton says, was grounds for termination.
In over 100 pages, Krafton responds to every claim made by the former executives in their complaint, going over the document paragraph-by-paragraph. Most of the document is Krafton denying allegations or admitting to certain facts, like a timeline, as is standard in documents like these. The company is asking the court to deny all claims made by the former Unknown Worlds executives in their complaint, and to award Krafton costs like attorney’s fees.
“We believe the facts speak for themselves,” a Krafton representative said in a statement. “This answer reflects our commitment to protecting both the Subnautica IP and the global community that has supported it for years.”
The former Unknown Worlds executives did not immediately respond to Aftermath’s request for comment.
