Former Subnautica 2 developer Unknown Worlds' leadership sues publisher Krafton

Unknown Worlds Entertainment's former leadership and founders, Charlie Cleveland, Max McGuire, and Ted Gill, have filed a lawsuit against publisher Krafton, escalating what has become the gaming industry’s biggest dispute of 2025. The legal action came after tensions rose over Subnautica 2’s delayed release and allegations surrounding a 250 million bonus.

The drama unfolded in July when Krafton replaced Unknown World’s leadership: Charlie Cleveland, Max McGuire, and Ted Gill, who founded the company in 2001. Replacing them was Steve Papoutsis, former CEO of Striking Distance Studios and one of the chief executives behind The Callisto Protocol.

Krafton acquired Unknown Worlds for $500 million in 2021, including a $250 million provisional bonus if Unknown Worlds met certain revenue targets by the end of 2025. The bonus was to be distributed amongst the studio’s 100 employees, with Cleveland, McGuire, and Gill receiving 90% of the payout (According to Bloomberg).

The revenue milestone could only be met if Unknown Worlds released Subnautica 2 in Early Access. After changing team leadership, Krafton announced Subnautica 2 would be released in 2026, making it impossible for the company to meet its revenue target. In a public statement, Cleveland previously stated that “know in our souls that the game is ready for Early Access.”

Krafton pushed back, accusing, “The former leadership abandoned the responsibilities entrusted to them.” Krafton alleges that Cleveland shifted his focus to a personal film project instead of working on Subnautica 2. The publisher stated further, “ We feel a profound sense of betrayal by their failure to honor the trust placed in them by our fans.”

In response, Cleveland posted in the Subnautica community,” We’ve filed a lawsuit against Krafton: the details should eventually become (at least mostly) public - you all deserve the full story.” 

Cleveland further stated, “Suing a multi-billion dollar company in a painful, public, and possibly protracted way was certainly not on my bucket list. But this needs to be made right. Subnautica has been my life’s work, and I would never willingly abandon it or the amazing team that has poured their hearts into it.”

This lawsuit is turning out to be a litmus test for how the gaming industry treats creative talent and contractual agreements. The fate of Subnautica 2 is at stake, as the outcome could have lasting effects on developer-publisher relations across the gaming industry.