A Sinking Ship: Krafton Doubles Down in Formal Response to Subnautica 2 Lawsuit

The highly anticipated sequel, Subnautica 2, has been at the center of a tense legal drama, and the conflict has just escalated. In a formal legal response to a lawsuit filed by the former leads of developer Unknown Worlds, publisher Krafton has fiercely defended its actions and launched a scathing counter-narrative. The initial lawsuit, filed by co-founders Charlie Cleveland and Max McGuire, and former CEO Ted Gill, accused Krafton of intentionally sabotaging the game’s development and delaying its Early Access launch from 2025 to 2026 to avoid paying out a massive $250 million bonus. In a new legal document, Krafton has not only denied these claims but has instead accused the former executives of “resort[ing] to litigation to demand a multimillion-dollar payday they haven’t earned.” This escalating feud is painting a dramatic and complicated picture of corporate acquisition, creative burnout, and a battle for the soul of one of gaming’s most beloved indie franchises.

The core of the dispute revolves around a performance-based bonus of up to $250 million that was promised to Unknown Worlds’ staff if the studio could hit certain revenue targets by June 2026. According to Krafton’s response, the three former leaders—who received a substantial payout from the initial acquisition—”quickly lost interest in developing Subnautica 2″ after the deal was finalized. The company alleges that Cleveland and McGuire “abandoned their roles” to pursue “personal passion projects,” with Cleveland publicly documenting his work on filmmaking and McGuire focusing on other unrelated initiatives. Krafton claims this “absence” and “lack of leadership” led to significant developmental delays and a game that was not ready for its planned 2025 Early Access release. The publisher points to an internal assessment from March 2025, which revealed that the game’s first two Early Access builds would contain only “12% of our intended 1.0 scope,” with a lead developer joking that at the current pace, development would take “30 years” to complete.

A Clash of Narratives and a Battle for the IP

The dueling accounts from both parties paint a starkly different picture of what went wrong behind the scenes. The former Unknown Worlds executives’ lawsuit claims that Krafton began a “months-long campaign to delay Subnautica 2,” pulling key resources and even cutting off communication with the development team. They allege that Krafton’s actions were driven by a desire to avoid paying the lucrative bonus, a claim that has resonated with many fans who have grown wary of corporate interference in the indie space. However, Krafton’s formal response flips this narrative on its head. The publisher alleges that the former executives were the ones pushing for a premature release, willing to “gamble with the release of any game, even one that would damage the Company’s goodwill, in time for them to maximize their earnout.” In its legal filing, Krafton claims it had to fire the three leaders “to prevent [them] from permanently damaging Unknown Worlds’ most valuable IP, the Company itself, and its goodwill with its fans.” The publisher even draws a parallel to Kerbal Space Program 2, a game that was widely criticized for a buggy and unfinished Early Access launch, as a cautionary tale of what could have happened to Subnautica 2.

The Allegations and the Implications for the Future

In its lengthy legal response, Krafton also raises some serious allegations against the former leads. The company claims that it asked Cleveland, McGuire, and Gill to return and lead the development of Subnautica 2, but they declined, with one of them stating, “There’s no coming back to a job they didn’t have.” The response also alleges that the executives threatened to self-publish the game without Krafton’s involvement and that they “secretly downloaded massive amounts of confidential information” from the studio. These are explosive claims that suggest a much deeper and more acrimonious split than previously thought. The lawsuit is now a battle of he-said, she-said, with both sides presenting vastly different accounts of the same events. For fans of the series, this is a deeply unsettling saga that has cast a long shadow over the future of Subnautica 2. The game is now set for a 2026 Early Access release under the leadership of former Striking Distance CEO Steve Papoutsis, but the legal drama, and the potential damage to the series’ reputation, may be difficult to overcome. The ultimate outcome of this lawsuit will likely shape not just the future of the Subnautica franchise, but also the dynamics between publishers and independent developers for years to come.