Krafton Responds to Lawsuit, Alleges Negligence in Subnautica 2 Development
Publisher Krafton, the company behind the popular battle royale game PUBG: Battlegrounds, has formally responded to a lawsuit filed by former executives of Unknown Worlds, the studio known for the Subnautica series. Krafton has accused the former leaders of “effectively abandoning their duties” shortly after the acquisition of Unknown Worlds, despite the publisher's repeated attempts to retain them within the team.
The legal dispute began in July when former Unknown Worlds bosses Charlie Cleveland, Ted Gill, and Max McGuire filed a lawsuit, alleging that Krafton intentionally delayed the launch of Subnautica 2 to avoid paying them $250 million in bonuses. However, Krafton strongly refutes these claims, asserting that the sequel was not ready for release, even in early access, largely due to the alleged loss of focus from its leadership after receiving significant payments from the studio's sale.
Allegations of Abandoned Duties and Personal Pursuits
In its recent filing, Krafton claims that Cleveland and McGuire, who each received nearly $200 million from the studio's sale, shifted their attention to personal projects and ceased working effectively for Unknown Worlds. Meanwhile, Gill, who received $60 million, allegedly focused on leveraging his power to extract maximum payments from the agreement rather than concentrating on the development of a successful game.
By July 2023, the alleged absence of Cleveland and McGuire began to significantly impact the Subnautica 2 development team. A development director at Unknown Worlds reportedly informed Gill that “people think… Max and Charlie have stepped away from studio leadership, but they don’t understand why.” In reality, Cleveland had publicly stated on social media that he was leaving video games to pursue filmmaking. McGuire, on the other hand, reportedly began working on “initiatives beyond the company's core business,” stating his priority was to try something personally meaningful to him. While Gill remained President and General Manager, Subnautica 2 reportedly struggled with consistent development delays under his leadership without its original creators actively involved.
Concerns Over Game Quality and Franchise Future
According to Krafton’s response, problems with Subnautica 2 became evident during an internal evaluation in March 2024. Instead of addressing the issues, the executives allegedly blamed others, reorganized the team, and continued to scale back the game’s scope. Krafton claims it repeatedly urged the Unknown Worlds bosses to return to their responsibilities, but they reportedly refused.
By spring 2025, Krafton remained highly concerned that Subnautica 2’s state was far from satisfactory for an early access launch. The lawsuit details that Krafton CEO Changhan Kim feared that, in its then-current condition, the sequel could suffer the same fate as Kerbal Space Program 2, causing “irreparable damage to the entire franchise.” Krafton also referenced a comment from one of the executives in March 2025, who stated that the first and second early access versions of Subnautica 2 would contain “only 12% of all planned content.” He then joked that “at this rate, development would last 30 years.”
Krafton stated, “As the sole shareholder of Unknown Worlds, Krafton has invested $500 million in the success of not only Subnautica 2, but also Subnautica 3, Subnautica 4, and any other future products of the franchise.” The company feared that the actions of the three executives could cause irreparable damage to the game, the studio, Krafton itself, and its relationship with fans. Consequently, Krafton made the decision to terminate the contracts with Cleveland, McGuire, and Gill.
Implications for Players and the Franchise
Krafton is seeking a complete dismissal of the former executives' lawsuit, along with compensation for legal fees and other costs. “This lawsuit is not just about defending business interests. It reflects our responsibility to players and our commitment to preserving the authenticity of the franchise,” the company added. For fans of the Subnautica series, this ongoing legal battle highlights the behind-the-scenes challenges of game development and publishing, with Krafton emphasizing its commitment to delivering a quality product and protecting the long-term health of the beloved aquatic survival franchise.
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