It’s one of the strangest and most public fallings out in recent games industry history. The leadership team of Subnautica studio Unknown Worlds were recently removed by owner and publisher Krafton, Inc., causing debate and speculation around employee bonuses tied to Subnautica 2’s Early Access release.

Subnautica 2, for those not aware, is the second most-wishlisted game on Steam and a sequel to one of the most successful survival games on PC and consoles.

Former CEO Ted Gill, co-founder and creative director Charlie Cleveland, and co-founder and CTO Max McGuire were removed from the studio, replaced by Steve Papoustis, who’s also CEO of The Callisto Protocol developer Striking Distance.

What followed was an ongoing spat surrounding the development of the Subnautica sequel, with allegations going back-and-forth on royalties and progress of the game’s development.

It’s an unusually messy situation, with a fascinating insight into the relationship between developer and publisher, as well as the parameters of what’s considered acceptable for a Steam Early Access release when there’s a lot of money on the line.

With Subnautica 2 pushed back from a 2025 Steam Early Access launch to 2026, the situation is far from over, with a complaint now filed in the Chancery court of Delaware by the company founders. In-depth details of that complaint can be be found here.

As more news unfolds, GamesIndustry.biz will update the timeline below with new information as it comes to light. Here’s everything we know so far about Krafton versus the former leadership team of Unknown Worlds.

October 31, 2021

South Korean publisher Krafton, owner of PlayerUnknown’s Battlegrounds, announces it’s acquiring US-based Subnautica developer Unknown Worlds, which launched the successful standalone expansion Subnautica: Below Zero out of Early Access earlier that year.

“Unknown Worlds’ structure and leadership will remain in place to retain its unique creative identity,” Krafton said in the announcement at the time.

“In addition to ongoing updates for Subnautica and Subnautica: Below Zero, Unknown Worlds is currently working on a new genre-defining game, which is slated to launch into early access in 2022.”

The price: $500 million initially, with an additional $250 million in potential performance-related bonuses.

September 29, 2022

That “genre-defining game” turns out to be digital miniature game Moonbreaker, which launches in Steam Early Access to heated criticism over microtransactions (which are later removed). A full launch follows in 2024. Krafton eventually calls Moonbreaker a “failure”.

October 17, 2024

Subnautica 2 is shown in a first teaser trailer, which promises an Early Access release will follow in 2025 for PC and Xbox.

July 2, 2025

Krafton announces Steve Papoustis will replace the leadership team of Ted Gill, Charlie Cleveland, and Max McGuire at Unknown Worlds. “While Krafton sought to keep the Unknown Worlds’ co-founders and original creators of the Subnautica series involved in the game’s development, the company wishes them well on their next endeavors,” read a statement.

No reason is offered for their departure, but given events that follow, it’s possible to read between the lines on how Krafton felt about the progress being made with Subnautica 2.

“As part of its oversight, Krafton is committed to achieving regular milestones to assess progress across its creative studios,” the statement read. “These reviews, based on clearly defined metrics and targets, will help ensure that games meet both creative and quality standards. This process is essential to delivering the right game at the right time. Unknown Worlds’ new leadership fully supports this process and is committed to meeting player expectations.”

July 4, 2025

Cleveland responded to the move with his own statement posted on Reddit and his website, calling Krafton’s decision “quite a shock”. He also claimed the game is “ready for early access release”.

“And while we thought this was going to be our decision to make, at least for now, that decision is in Krafton’s hands,” Cleveland said. “And after all these years, to find that I’m no longer able to work at the company I started stings.”

July 9, 2025

Subnautica 2’s Early Access release is delayed until 2026. Bloomberg reports that $250 million of developer bonuses are tied up in the game reaching certain revenue targets by the end of 2025. It also says the studio’s former leadership planned to share the bonuses with the 100-or-so employees at the company.

In a statement to Eurogamer, a Krafton spokesperson said delaying the game was “under discussion” prior to the change in leadership, and that the decision was not “influenced by any contractual or financial considerations”.

Instead, the reason given was based on game content and a round of community playtests.

“During playtests for Subnautica 2, we received valuable feedback from our community that reinforced our confidence in the game’s direction. At the same time, the feedback highlighted a few areas that could benefit from further refinement before release,” the spokesperson told Eurogamer.

“As community voices play a central role in how we shape our games, we’ve made the decision to give the development team more time to implement that feedback and deliver a more complete experience. As a result, Subnautica 2’s Early Access launch has been rescheduled for 2026.”

This tallies with the reasoning given on the Subnautica 2 website – though that one doesn’t discuss leadership changes or compensation matters.

July 10, 2025

The situation escalates. In an unprecedented move for a major publisher, Krafton posts a statement on its official homepage taking aim at the ousted leadership of Unknown Worlds with the strapline, “Inevitable Leadership Change Driven by Project Abandonment – Despite Holding 90% of Earnout for Themselves”.

The statement first discusses how the studio acquired Unknown Worlds for the purposes of making a strong sequel to a best-selling game. The discussion then turns more directly to the bonus situation discussed in Bloomberg’s article.

“Specifically, in addition to the initial $500 million purchase price, we allocated approximately 90% of the up to $250 million earn-out compensation to the three former executives, with the expectation that they would demonstrate leadership and active involvement in the development of Subnautica 2.”

“However, regrettably, the former leadership abandoned the responsibilities entrusted to them. Subnautica 2 was originally planned for an Early Access launch in early 2024, but the timeline has since been significantly delayed. Krafton made multiple requests to Charlie and Max to resume their roles as game director and technical director, respectively, but both declined to do so.”

From here, Krafton’s statement gets a little more specific on what it believes wasn’t working behind the scenes of Subnautica 2.

“In particular, following the failure of Moonbreaker, Krafton asked Charlie to devote himself to the development of Subnautica 2. However, instead of participating in the game development, he chose to focus on a personal film project.”

The statement then says that the alleged leadership “absence” has meant “repeated confusion and significant delays” for the project.

“The current Early Access version also falls short in terms of content volume.”

That’s followed by Krafton explaining its disappointment with the conduct of the former leadership team, saying it feels “a profound sense of betrayal by their failure to honor the trust placed in them by our fans.”

The statement also elaborates on the compensation situation and what it’ll mean for remaining staff at the studio, although not with specifics.

“Additionally, Krafton has committed to fair and equitable compensation for all remaining Unknown Worlds employees who have continuously and tirelessly contributed to Subnautica 2’s development.”

“We believe that the dedication and effort of this team are at the very heart of Subnautica’s ongoing evolution, and we reaffirm our commitment to provide the rewards they were promised.”

In response on Reddit, Cleveland posts “we know in our souls that the game is ready for Early Access – that’s just how we roll. And we’d like nothing more than for you to play it (game devs live for this). But it’s not currently under our control.”

Cleveland then mentions a lawsuit is brewing against Krafton. “We’ve now filed a lawsuit against Krafton: the details should eventually become (at least mostly) public – you all deserve the full story. 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.”

Cleveland also denies that 90% of the $250 million bonus would’ve gone straight in their pockets, explaining that they’d always shared their profits with the team. “As for the earnout, the idea that Max, Ted and I wanted to keep it all for ourselves is totally untrue.”

July 11, 2025

Two slides from a May 2025 milestone review for Subnautica 2 are leaked (posted on r/Subnautica here). They appear to show that targeted content for the Early Access release was scaled down from goals set both a couple of years ago and one year ago, with the number of biomes, creatures, and modes cut down for a planned launch, among other changes.

“Due to a gap between the current state and the content volume assumed during the initial launch planning, it is necessary to reassess the release timeline and roadmap,” one slide concludes.

Whatever conclusions might be drawn from these slides, it’s worth saying that they lack context (including the rest of the presentation) and are the sort of internal documentation that’s generally not intended to be viewed by the public.

July 13, 2025

Krafton takes the unusual step of confirming the slides from the leaked internal milestone document are the real deal in a statement, which was sent to GamesIndustry.biz.

“Krafton, Inc. is issuing the following statement in response to growing speculation surrounding the development of Subnautica 2. This statement aims to offer clarity and context regarding the current situation,” the statement reads.

“The document that has been circulating on social media and reported by various outlets is indeed part of an internal milestone review conducted as part of the Subnautica 2 project. Krafton has confirmed that portions of it have been leaked and are now being widely shared across online platforms and within the fan community. Krafton recognises the confusion this has caused.”

“Given these circumstances, Krafton has determined that transparent communication is necessary and has chosen to confirm the authenticity of the document. Krafton believes that minimising speculation and ensuring accurate communication with players must take precedence.”

The statement then explains the purposes of milestone reviews for context.

“These reviews help assess development progress, define clear objectives, and ensure that each project aligns with Krafton’s standards in both creativity and quality. This process is central to Krafton’s commitment to delivering polished, high-quality games at the right time.”

Who leaked the slides from the milestone report? That’s unknown.

July 15, 2025

A new Bloomberg report sheds light on the bonus situation and lawsuit. Krafton apparently plans to extend the eligibility period for the potential $25 million bonus, which would be shared between around 40 employees of Unknown Worlds.

It’s also reportedly planning to advance a portion of 2026’s projected profit pool to staff.

The same report also says that co-founders Gill, Cleveland, and McGuire filed a complaint with the Delaware Chancery Court on July 10, which was sealed. Until…

July 16, 2025

As posted by GameFile, the ‘former shareholders of Unknown Worlds Entertainment’ allege that Krafton used “pressure tactics” to delay Subnautica 2’s Early Access release until 2026, thus avoiding paying out the $250 million bonuses.

Read our in-depth breakdown of the complaint here.

The complaint alleged a “ploy” by Krafton to “delay the game, avoid the earnout, keep the money for itself”. This includes tactics like withholding essential publishing services and marketing activity, the complaint said.

The existence of a Subnautica movie is discussed, which involved Cleveland’s participation to help grow the IP. It’s alleged in the complaint that Krafton’s leadership supported this.

Unknown Worlds’ former leadership also said they couldn’t legally be ousted under the terms of the 2021 agreement to acquire the studio, which gave them operational control over Subnautica 2 (including deciding when to release it).

The complaint sees the plaintiffs seeking equitable and monetary relief, as well as restored creative and operational control of the studio.

Krafton responded to the legal complaint. “Krafton’s decisions were made to ensure Subnautica 2 is the best possible game and lives up to fan expectations. Releasing the game prematurely with insufficient content, falling short of what fans expect in a sequel, would have both disappointed the players — who are at the heart of everything Krafton does — and damaged the reputations of both the Subnautica and Unknown Worlds brands.

“While we are disappointed that Charlie, Max, and Ted have filed a lawsuit seeking a huge payout, we look forward to defending ourselves in court. In the meantime, Krafton remains focused on what matters: delivering the best possible game as quickly as possible to Subnautica’s fans.”