[Alpha Biz= Paul Lee] A legal clash is looming between KRAFTON and the former leadership of its U.S. game studio subsidiary, Unknown Worlds Entertainment, over the development of the next installment in the globally popular Subnautica series.



On July 2, KRAFTON appointed Steve Papoutsis, CEO of Striking Distance Studios, as the new head of Unknown Worlds. This move saw the exit of co-founders and key executives Ted Gill, Charlie Cleveland, and Max McGuire from management.



Unknown Worlds, acquired by KRAFTON in 2021 for approximately $500 million, has been developing Subnautica 2. As part of the acquisition agreement, KRAFTON had set aside an earn-out incentive worth $250 million, with about 90% allocated to the three outgoing executives, conditional upon meeting specific development milestones by the end of 2024.



Following the leadership reshuffle, KRAFTON announced a delay in Subnautica 2’s early access release to 2025, sparking suspicions—particularly from foreign media—that the delay may be aimed at avoiding milestone-based bonus payouts.



KRAFTON denied the allegations, stating on July 11:

“We repeatedly requested Charlie Cleveland and Max McGuire to return as directors for Subnautica 2, but they declined. The delay stems from their failure to fulfill leadership responsibilities.”



According to KRAFTON, after the release of Moonbreaker, Cleveland was asked to focus on Subnautica 2 but instead chose to prioritize a personal film project, which led to leadership gaps and project delays.



Further credibility was added to KRAFTON's claims when an internal document, leaked via Reddit, revealed missed development milestones and scaled-back content goals for Subnautica 2. The document, dated May, was confirmed to be authentic by media outlets.



In response, former creative director Charlie Cleveland declared his intent to sue KRAFTON, asserting on July 11 that:



“Subnautica 2 is already ready for early access. KRAFTON’s narrative is misleading.”



The dispute is now poised to escalate into a legal battle, as both sides prepare to defend their positions over the fate of Subnautica 2 and the multi-million-dollar earn-out in question.
 

 

 

 

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