You know that personal film project they claimed one of the founders was distracted by? It was a Subnautica film they asked him to make.
Krafton deserves zero sales on this game. Let it fucking tank, make Krafton go bankrupt.
Zero mention of Moonbreaker? Come on. Unknown Worlds have been scamming for a while. Good job, Krafton.
The ousted leadership of video-game developer Unknown Worlds said parent company Krafton Inc. fired them after the executives presented the company with upbeat revenue projections that would have triggered most, if not all, of a $250 million bonus payment, according to a copy of their lawsuit which was unsealed Wednesday.
Former Unknown Worlds Chief Executive Officer Ted Gill and founders Charlie Cleveland and Max McGuire said Krafton sought to delay the release of their new game, Subnautica 2, after realizing they would have to pay that large a sum, according to their complaint. The South Korean game publisher offered the executives a lower payout before terminating their employment earlier this month, the lawsuit alleges.
Gill, Cleveland and McGuire filed a lawsuit for breach of contract on July 10. A representative for Krafton declined to comment on the suit. In a statement to press last week, Krafton said the three studio leaders had “abandoned the responsibilities entrusted to them” and that “the absence of core leadership has resulted in repeated confusion in direction and significant delays in the overall project schedule.”
Krafton purchased Unknown Worlds in 2021 for $500 million, with as much as $250 million more due to be paid in 2026 if the company hit certain revenue targets. The complaint argues that all was well between the two sides until a series of meetings in early 2025 when Gill was negotiating with Krafton about paying bonuses to employees who weren’t eligible under the original acquisition terms. About 40 people employed by Unknown Worlds at the time of the sale were told they would receive payouts, mostly in the six-or-seven-figures, but the executives also wanted to offer bonuses to those who had joined later.
During those meetings, Gill said that their revenue projections for the coming year had been conservative and that with the upcoming releases of the original Subnautica on mobile and Switch 2, they were expecting significantly higher numbers. Subnautica 2 was also expected to be a big hit, with nearly 2.5 million people adding the game to their wishlists on the PC platform Steam.
“After Krafton’s leaders reviewed Gill’s projections and evaluated the anticipated revenue and earnout numbers, everything changed,” they said in their complaint.
The leadership group said that in subsequent meetings, Krafton began pushing for Unknown Worlds to delay Subnautica 2. In the weeks that followed, Krafton employees told Gill they believed the company was trying to get out of paying the earnout, the complaint alleges.
During one lunch meeting, according to the complaint, Krafton Chief Executive Officer Changhan Kim told Cleveland that releasing the game in 2025 “could be disastrous financially and hugely embarrassing” for the company. Krafton later said that had been a mistranslation.
Throughout May and June, the two sides continued to battle as Krafton halted publishing duties such as marketing and adapting the game for local markets, as well as paying vendors, according to the complaint. The former leadership team said that the publisher refused to support the game’s imminent summer release and that Unknown Worlds missed out on “highly valuable” promotional opportunities because Krafton didn’t respond to emails. Gill said he was told by one of Krafton’s top executives that “pulling these resources was a permissible way for Krafton to avoid supporting the earnout,” according to the complaint.
By the end of June, the relationship had deteriorated. During various meetings, Krafton asked the leadership group to accept a lower earnout, according to the complaint. Around the same time, Kim wrote a letter to the leaders, reviewed by Bloomberg, accusing them of “failing to fulfill the responsibilities with which you were entrusted” and saying that Subnautica 2 had faced “slow and underwhelming progress.”
On July 1, Krafton fired the three studio leaders, who are now seeking damages “in an amount to be determined at trial,” according to their suit. Krafton has said it willextend the bonus period until next year, with Unknown Worlds employees able to share in a $25 million payout if revenue targets are hit.
One main point of contention between the founders and Krafton was whether the game was ready for release this year under the company’s early access model, which allows outsiders to play the game and submit feedback. Presentation slides from Krafton reviewed by Bloomberg, which included quotes from the company’s internal testers, argued that Subnautica 2 lacked content and didn’t feel innovative enough.
The lawsuit alleges otherwise. Pre-release tests involving hundreds of users “drew high marks and confirmed that the game was ready to meet those lofty expectations," it said.
Developers at Unknown Worlds speaking to Bloomberg said they believed the game was in good shape, as did some external parties, who asked to not be identified. One developer at a separate company who played Subnautica 2 and requested anonymity because they signed a non-disclosure agreement told Bloomberg they enjoyed the game and that it “seemed way more robust” than other titles in early access.
The other point of contention was the roles that Cleveland and McGuire played at the studio. In public statements and in documentation reviewed by Bloomberg, Krafton accused the two founders of neglecting their duties because they were minimally involved with the development of Subnautica 2.
In their suit, the founders said that Krafton was aware of their new roles and that Cleveland had spent a large amount of time working on a Subnautica film, which Krafton had asked the studio to develop.
IT still remains to be seen if all this is true, but it reads as standard corporate behaviour.
At this point anyone selling a company to a bigger studio is just either ignorant or greedy. It’s almost a given that they’ll just crash it into the grounds. Acquisitions and mergers might be like the eighth deadly sin. Everyone loses.
Who cares? It’s the audiences fault for assuming that prior performance is an indicator of future performance. Let the founders cash out. Buyers get rich because audiences think quality will be maintained post acquisition. How often does that really happen though?
What the fucking fuck is this? Websites are comically bad now.
One developer at a separate company who played Subnautica 2 and requested anonymity because they signed a non-disclosure agreement told Bloomberg they enjoyed the game and that it “seemed way more robust” than other titles in early access.
Yeah, this is clearly the publisher trying to get out of paying the full bonus.
When I first heard about the firings and the delay to the game I thought “This doesn’t sound plausible. Are they really going to ruin their investment and effectively kill the company to supposedly save a quarter of a billion. That would be unbelievably stupid”. But with every subsequent nugget of information it’s getting increasingly clearer that they, Krafton, actually are unbelievably stupid. They’re pretty much guaranteed that if Subnautica 2 gets released (and that’s assuming Subnautica 2 is in a good enough position to be released) the studio will shutter as all the talent will move on and all the money Krafton spent acquiring the studio is thrown in the wind. They’re not even going to save the quarter billion because the delay means they’re going to be paying at least 6 months wages for minimum effort work because I doubt anyone at that studio is willing to put in the effort after being cheated out of their bonus.
Even if it’s all so obvious I still find it hard to believe the publisher is THAT stupid. But that’s the world we live in, where people get to make idiotic decisions because they’re greedy as fuck.
I mean, the publisher seems to be pretty stupid, because…how did they figure that $250 million?
There are two entries in the Subnautica series, Subnautica and Below Zero. Subnautica has sold “over 5 million copies” at a retail price point of $30. So that’s $150 million in gross revenue. For this back of the napkin math I’ll assume that the “over five million” and the number of copies sold at a discount come out in the wash. 30% of that gross revenue is going to immediatley go to Steam or whatever other platform, so the company got $100 million in net revenue before their own expenses like rent and power bills gets at it.
I cannot find sales figures for Below Zero, but it sells for the same price point and I don’t think it could have possibly sold more than Subnautica did, so let’s figure another $150 million gross, $100 million net.
Subnautica as a franchise netted its studio ~$200 million across the launch of two games selling ~10 million copies.
And Krafton had agreed to pay out a $250 million bonus for reaching a certain revenue target in 2025, which they were on track to do given the announced early access launch.
Just to put them in the black for that bonus, Subnautica 2 would have to sell better than both previous games put together at a higher price, and that doesn’t touch the purchase of the studio, operating expenses, or the dump truck of cocaine that must have been involved in these financial decisions.
I didn’t want to think they’re completely incompetent so I decided to do some digging. That $250 million is actually part of their acquisition deal. Krafton technically bought Unknown Worlds for $750 million. $500 million was paid up front and the extra $250 million was due for 2026 if Unknown Worlds met the performance clause. That $250 million has nothing to do with the sales of Subnautica, it’s part of the buyout.
This could mean they were always going to try and stiff Unknown Worlds. It also means it’s probably less about the people working at Unknown Worlds getting stiffed and more about the leadership expecting a payout that was agreed upon.
Okay, they spent $750 million for a studio that has barely made $250 million in its history. I still don’t think the math mathulates here.
Yeah in the world where EA exist and Xbox close down a studio that just launched a successful game and also fire bunch of people and shutting down lot of project, this doesn’t sound far fetch at all.
I guess the lesson the first game trying to teach is to never believe any giant corporation.
They paid for their expertise, even offering a bonus that was clearly less than whatever their projected profit would be, and then tried to squander it because they didn’t listen to their expertise.
Publishers in all kinds of industries are risk adverse to the point of not trusting whoever they made deals with to follow through. This is totally on brand for publishers!
I doubt anyone at that studio is willing to put in the effort after being cheated out of their bonus
Correct me if I’m wrong, but most of those 250 million were going to the three people that were fired, not the actual workers. I stopped caring about this issue when I learned that, seems like just rich people bickering to me.
That’s according to Krafton and we know they will bend the truth to create a narrative. But even if it’s true I still think Krafton are the assholes here. I’m less concerned when people in positions of power don’t get their position enabled bonuses, but Krafton is also taking away whatever bonus the actual workers were originally promised.
In their suit, the founders said that Krafton was aware of their new roles and that Cleveland had spent a large amount of time working on a Subnautica film, which Krafton had asked the studio to develop.
The moment they put someone who oversee the development of Calisto Protocol as CEO, it already smell like a seamoth full of dead peeper. Now this one? This one takes the cake.
In other news, Krafton extends the payout today too.
Nobody knows what’s going on, at this point just wait until this goes over to court and we’ll see who did what.
I’m not a numbers guy but $25 million seems a tad smaller than $250 million
I saw one article that said 250 total. 25 million goes to the 40 employees who developed it and the other 225 goes to the 3 guys who got fired.
Smart move, because they absolutely would have gotten sued and likely wound up with no game.
The second I heard the heard the firings happens and the rumors behind why I removed the game from my wishlist. And as more slowly comes out it makes Krafton look worse and worse
That could hurt the devs more than the publisher.
If they can prove breach of contract they can maybe get their IP back. Wishlists are a huge deal for if they want to shop the game around to other publishers.
the publishers have the data of the peak of wishlist, they are free to calculate how much mistreating the devs is going to cost them
It would be a few years later for the court to finally reach any judgement
Yeah, fuck Krafton. Hope this game bombs.
Was 100% going to buy it. Absolutely won’t now. Fuck em.
Planned on paying for day 1 release. Now yar.
I mean, both things can be true. Krafton might be trying to weasel out of paying that bonus, and the game might not be ready like it should be.
This story comes alongside numerous reports from the dev team that said the team felt it was ready. Plus it was only supposed to launch into early access.
They still both “could” be true. Though more likely something else was a foot. Maybe the earnings target was set poorly such that the payout was more than the increased earnings. You would think in general that such a clause would be mutually beneficial, but clearly one side didn’t think so.
And the dev team for Cities Skylines II kept saying the team felt it was ready, while it was a hot mess. They have an interest in publishing it now.
Launching into early access while not being up to certain standard could hurt the brand.
Now maybe the game was ready and it’s all Krafton’s fault. All I’m saying is that it is absolutely possible that the game isnt ready.
