Subnautica 2: What’s Happening with the Game?

If I were to encapsulate the current situation surrounding Subnautica 2 in three words, they would be: chaotic, tumultuous, and uncertain. This description does not imply that the game itself is in a dire state; rather, it highlights the disarray in the relationship between Subnautica series developer Unknown Worlds and its parent company, Krafton. Just this month, Krafton dismissed the founders and CEO of Unknown Worlds, postponed the release of Subnautica 2 until 2026, and the removed executives have initiated legal action against Krafton, seeking to reclaim their creative authority over the game and the studio. Central to this conflict is a significant bonus payment potentially worth up to $250 million.

Let’s delve deeper into the events that have led us to this point and unravel the complex dynamics involving Subnautica 2, Krafton, and Unknown Worlds.

In 2001, Charlie Cleveland inadvertently founded Unknown Worlds while creating the widely acclaimed Half-Life mods, Natural Selection and Natural Selection 2. By 2006, technical director Max McGuire joined as an official co-founder of the studio. Motivated by the success of Minecraft and feeling fatigued from modding, Unknown Worlds set out to develop the underwater, open-world exploration game Subnautica, which entered early access on Steam in 2014. With extensive feedback from the gaming community, the game transformed into a uniquely tense and immersive survival experience, culminating in its official version 1.0 release in 2018. This was also the year when Ted Gill became part of the studio’s executive team, allowing Cleveland to concentrate on the game’s creative direction. Both Subnautica and its sequel, Subnautica: Below Zero, drew millions of players, solidifying Unknown Worlds’ reputation as a successful independent game development team.

As a result of this success, larger gaming studios took an interest. In 2021, PUBG publisher Krafton, which operates with an impressive annual budget in the billions, acquired Unknown Worlds for a staggering $500 million. This acquisition included a promise of an additional performance-based payout of up to $250 million, contingent on Unknown Worlds meeting specific performance targets by the end of 2025. This bonus has become a pivotal factor in the unfolding chaos.

Recent reporting has shed light on the specifics of this deal. When Krafton purchased Unknown Worlds, the leadership positions were held by Cleveland, Gill, and McGuire. The studio employed approximately 40 individuals at that time, who collectively received payouts totaling $50 million upon closing the deal and over the subsequent two years. This broader team was eligible for as much as $25 million in the performance-based earnout set for 2025, with individual expectations varying, though most anticipated amounts in the six or seven-figure range. The remaining $225 million was earmarked for the leadership team at Unknown Worlds, who expressed their intention to distribute a portion of this bonus to other employees not included in the payout, thereby encompassing the entire studio’s workforce of around 100 individuals.

The leadership team of Unknown Worlds reiterated this commitment in a lawsuit filed against Krafton on July 10, 2025. However, we are jumping ahead in this complex narrative.

Post-acquisition, Unknown Worlds continued to enhance Subnautica and Below Zero. In February 2024, the studio launched Moonbreaker, a turn-based strategy game that struggled to gain traction, partly due to its execution. Since then, the studio has redirected its focus toward Subnautica 2. The game was initially slated for an early access launch window in 2025 and has now become the second-most wishlisted title on Steam, trailing only behind Hollow Knight: Silksong.

The first public indication of discord between Unknown Worlds and Krafton emerged on July 2, when Cleveland, Gill, and McGuire were unexpectedly terminated and replaced by former Callisto Protocol studio head Steve Papoutsis. Krafton did not provide a specific rationale for this leadership change, instead offering a vague statement: “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 in their future endeavors.”

At this point, Krafton did not announce any delays to the early access launch, but it did implement a review process deemed “essential for delivering the right game at the right time.” The publisher suggested that the ousted leaders had been uncooperative regarding this new protocol.

“Unknown Worlds’ new leadership fully supports this process and is committed to meeting player expectations,” stated Krafton in its press release.

On July 4, Cleveland shared a reflective post about his tenure in game development, expressing his disappointment with Krafton’s management of Unknown Worlds and Subnautica 2. He also alluded to Krafton’s intention to postpone the game’s launch.

“You can understand why for Max, Ted, myself, the Unknown Worlds team, and for our community, the events of this week have been quite shocking,” Cleveland articulated. “We believe the game is ready for early access release, and we know players are eager to engage with it. While we anticipated this decision would be ours to make, for now, it lies in Krafton’s hands. After all these years, to discover that I am no longer able to work with the company I founded is disheartening.”

On July 9, Krafton officially postponed the release of Subnautica 2 to 2026. That same day, Bloomberg released a report detailing the performance-based bonus agreement, subtly questioning how the delay would hinder the studio’s ability to meet its targets, thereby jeopardizing the payout. This was the first instance where the specifics of the bonus arrangement became public knowledge.

Krafton subsequently issued a statement to Engadget — and on a pop-up on its website — on July 10 that explicitly accused the dismissed leaders of abandoning the studio in favor of personal creative projects, specifically criticizing Cleveland’s focus on a film endeavor. Additionally, the statement implied that Moonbreaker had been a failure and claimed that the former executives sought the bonus payment “for themselves.”

“Krafton made several requests to Charlie and Max to return to their roles as Game Director and Technical Director, respectively, but both declined,” the statement asserted. “In particular, following the underperformance of Moonbreaker, Krafton requested Charlie to dedicate himself fully to the development of Subnautica 2. However, instead of contributing to the game’s development, he opted to pursue personal film projects. Krafton contends that the absence of core leadership has led to confusion in direction and significant delays in the project timeline. Furthermore, the current Early Access version is lacking in terms of content volume.”

On the same day, Cleveland announced that he and the other terminated studio heads had initiated legal proceedings against Krafton.

“Suing a multibillion-dollar corporation in a painful, public, and potentially protracted manner was certainly not part of my plans,” Cleveland stated. “However, this situation must be rectified. Subnautica represents my life’s work, and I would never willingly abandon it or the fantastic team that has invested their passion into it. As for the earnout, the notion that Max, Ted, and I desired to keep it all for ourselves is utterly false.”

The details of the lawsuit were not revealed until July 16, but on July 15, Bloomberg reported that Krafton intended to extend the bonus payment deadline by an additional year, thereby providing the studio more time to achieve its targets. The publisher will also reportedly advance a portion of a separate profit-sharing bonus pool to all Unknown Worlds employees in 2025.

These actions appear to be aimed at mitigating the primary issues raised in the breach of contract complaint filed by Cleveland and other Unknown Worlds leaders against Krafton in Delaware Chancery Court. The unsealed lawsuit claims Krafton unlawfully terminated the studio heads and delayed Subnautica 2 to evade the bonus payments. It also outlines a timeline of escalating tensions between the founders and Krafton throughout this year, accusing the publisher of deliberate sabotage.

The lawsuit asserts that Krafton and Unknown Worlds maintained a respectful relationship until April 2025, when Gill presented Krafton executives with the studio’s positive revenue forecasts, based on the assumption that Subnautica 2 would launch in early access in 2025. He also detailed the expected bonus payout under their agreement.

“After that moment, everything shifted,” the lawsuit claims.

The complaint alleges that Krafton began seeking ways to oust the Unknown Worlds leaders and delay the launch of Subnautica 2, aiming to circumvent the bonus payment. Cleveland, Gill, and McGuire engaged in extensive discussions with Krafton executives regarding whether the game was ready for early access, and ultimately Krafton withdrew all resources from the studio. Krafton issued a stop order on Subnautica 2 development, took over Unknown Worlds’ communication channels, and began documenting claims that the founders had abandoned their fiduciary duties, according to the complaint.

Cleveland, Gill, and McGuire were dismissed and removed from the Unknown Worlds board of directors on July 1. This marks the point where the broader public became aware of the unfolding saga.

The core issue at hand is whether Subnautica 2 is genuinely prepared for an early access launch, a critical question as this impacts the potential $250 million bonus payment, which is at risk due to the delay. This amount is not only substantial for Krafton, but also represents a considerable loss for Cleveland, Gill, and McGuire, especially after losing their studio and flagship intellectual property. The dismissed leaders reiterated in their lawsuit that they “planned to share even more of the earnout with their dedicated team” than was contractually required. In the complaint, they seek for Krafton to fulfill its obligations as a publisher, pay out the full bonus as projected without delay, and reinstate them as the heads of Unknown Worlds.

All parties involved in this situation assert their desire to do what is best for Subnautica 2 and its player base. It’s possible they are all being honest, and this is merely a disagreement over creative integrity. Conversely, it might be the case that everyone involved is motivated by financial gain — a rather grim perspective. The reality, as is often the case, likely lies somewhere in between, and we may never uncover the full truth. However, it is likely that the court system will eventually determine who bears responsibility for this tumultuous situation.

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