Diff - krafton acquisition and controversy - Subnautica 2 Wiki

11 In October 2021, South Korean publisher KRAFTON, Inc. (the company behind PUBG: Battlegrounds) announced the acquisition of Unknown Worlds Entertainment. The deal closed in December 2021 for a total package of up to $750 million, $500 million upfront plus up to $250 million in performance-based earnout payments tied to Subnautica 2's revenue milestones, with the earnout testing period originally set to run through December 31, 2025.

33 The founders intended to distribute the earnout among approximately 100 employees, with payouts potentially ranging from hundreds of thousands to seven figures per person.

55 About KRAFTON

77 KRAFTON was founded in 2007 as Bluehole by Chang Byung-gyu in Seoul, South Korea. It rebranded in November 2018 as a holding company. CEO Changhan Kim (Kim Chang-han) took the role in 2020 after leading the creation of PUBG: Battlegrounds. The company went public on the Korea Exchange in August 2021, raising $3.8 billion. South Korea's largest IPO in a decade. Subsidiaries include PUBG Studios, Striking Distance Studios, and Unknown Worlds.

99 The Leadership Change

1010

1111 On July 2, 2025, KRAFTON removed co-founders Charlie Cleveland and Max McGuire, along with CEO Ted Gill, replacing them with Steve Papoutsis (previously CEO of Striking Distance Studios). KRAFTON stated it had implemented "regular milestones" and "clearly defined metrics and targets" and sought to keep the founders involved, but CEO Kim Chang-han later testified the founders had "effectively stopped working" on Subnautica 2 as of May 2025.

1212

1313 Project X

1414

1515 Court filings allege that CEO Kim established a secret internal task force called "Project X" with two objectives: (1) negotiate a deal with the founders on the earnout, and (2) execute a takeover of Unknown Worlds if negotiation failed. Slack messages between Kim and CFO Richard Yoon discussed takeover prospects. Kim allegedly viewed the earnout as "a threat to Kim's job" due to his 2026 contract renewal, stating the payout would cause "the value of the studio" to "drop significantly."

1616

1717 ChatGPT Allegations

1818

1919 The pre-trial brief alleges that Kim "turned to artificial intelligence to help him brainstorm ways to avoid paying the earnout." In a June 2, 2025 message to an executive named Maria Park, Kim included a ChatGPT link and wrote: "Now, ChatGPT [is] start[ing] to answer that it is difficult to cancel the earnout." During trial testimony, Kim confirmed he "actually searched on ChatGPT to get faster answers." KRAFTON did not produce the ChatGPT conversation logs; a footnote states they "no longer exist."

2020

2121 The Lawsuit

2222

2323 In July 2025, Fortis Advisors LLC (representing the former shareholders) filed a 58-page lawsuit in Delaware Chancery Court (Case No. 2025-0805-LWW, before Vice Chancellor Lori W. Will). The complaint alleges KRAFTON deliberately sabotaged the game's development to avoid the $250 million earnout.

2424

2525 Specific allegations include:

2626

2727 Pulling marketing materials and refusing partnership commitmentsHalting vendor payments affecting promotional supportWithdrawing localization, analytics, server infrastructure, and legal supportInstructing employees to stop "all creative tasks" related to the titleCharacterizing the game as unfinished despite positive playtest dataA KRAFTON executive allegedly attempted to negotiate a lower earnout with CEO Gill on June 18, 2025

2828

2929 KRAFTON's Counterclaims

3030

3131 KRAFTON counter-sued in August 2025, alleging the founders "abandoned the studio and took confidential information." According to KRAFTON's filings, the founders downloaded over 170,000 files upon their departure: McGuire allegedly took approximately 100,000 files (including hundreds related to the game Moonbreaker), Cleveland downloaded roughly 72,000 files eight minutes before his access was revoked, and Gill exported his entire company email account twice, triggering IT alerts.

3232

3333 The Trial

3434

3535 A three-day trial took place November 17-19, 2025, producing an 891-page transcript. KRAFTON's CFO Richard Yoon reportedly could not name a single KRAFTON employee who actually thought the game was unready for its planned release. CEO Kim testified: "There wouldn't be any deal" if he had known Cleveland wanted to stop making games. He expressed concerns about reinstating the founders, citing broken trust.

3636

3737 An internal creative director had recommended August 2025 as the Early Access launch date. The earnout was forecast at $191 million in the May 2025 base-case estimate.

3838

3939 Post-Trial Status

4040

41-Post-trial arguments were held January 9, 2026. On March 16, 2026, the Delaware Court of Chancery (Vice Chancellor Lori W. Will) found that KRAFTON had breached the equity-purchase agreement by removing the trio without cause, and reinstated Ted Gill as CEO of Unknown Worlds with full operational authority over the studio and Steam platform access. The court barred KRAFTON from impeding Gill's authority over the Early Access launch of Subnautica 2. To remedy the time lost during Gill's removal, the court equitably extended the earnout testing period by 258 days, moving the base deadline from December 31, 2025 to September 15, 2026, with the shareholder representative retaining a contractual right to extend it further to March 15, 2027. Co-founders Charlie Cleveland and Max McGuire were not reinstated. Phase Two of the litigation, covering money damages and whether KRAFTON deliberately impaired the earnout, remains pending. Following the ruling, Unknown Worlds confirmed the Early Access launch for May 14, 2026. The plaintiffs demand full reinstatement, payment of the complete $250 million earnout, and additional damages for reputational harm and lost income. KRAFTON has stated it is "nonsense" for the founders to return.

41+Post-trial arguments were held January 9, 2026. On March 16, 2026, the Delaware Court of Chancery (Vice Chancellor Lori W. Will) found that KRAFTON had breached the equity-purchase agreement by removing the trio without cause, and reinstated Ted Gill as CEO of Unknown Worlds with full operational authority over the studio and Steam platform access. The court barred KRAFTON from impeding Gill's authority over the Early Access launch of Subnautica 2. To remedy the time lost during Gill's removal, the court equitably extended the earnout testing period by 258 days, moving the base deadline from December 31, 2025 to September 15, 2026, with the shareholder representative retaining a contractual right to extend it further to March 15, 2027. Co-founders Charlie Cleveland and Max McGuire were not reinstated. Phase Two of the litigation, covering money damages and whether KRAFTON deliberately impaired the earnout, remained pending until the July 2026 settlement described below. Following the ruling, Unknown Worlds confirmed the Early Access launch for May 14, 2026. The plaintiffs demand full reinstatement, payment of the complete $250 million earnout, and additional damages for reputational harm and lost income. KRAFTON has stated it is "nonsense" for the founders to return.

4242

4343 Impact on Subnautica 2

4444

4545 The Early Access launch, originally planned for 2025, was pushed to 2026. Leaked milestone documents (confirmed authentic by KRAFTON) revealed significant content cuts from the original scope. The community reacted with boycott calls in community forums, though Steam wishlist numbers continued to climb.

4646

4747 Publisher Status After Reinstatement

4848

49-On April 7, 2026, three weeks after the March 16 court ruling that reinstated Ted Gill as CEO of Unknown Worlds Entertainment, the Subnautica 2 storefront listings on Steam, the Epic Games Store, and Xbox were updated to remove KRAFTON as the named publisher. Both developer and publisher fields now show Unknown Worlds Entertainment. KRAFTON remains the parent company of the studio and has stated it is currently focused on supporting the successful Early Access launch of Subnautica 2; the change is a storefront-listing diff, not a divestiture. Phase Two of the litigation, covering money damages and whether KRAFTON deliberately impaired the earnout, remains pending.

49+On April 7, 2026, three weeks after the March 16 court ruling that reinstated Ted Gill as CEO of Unknown Worlds Entertainment, the Subnautica 2 storefront listings on Steam, the Epic Games Store, and Xbox were updated to remove KRAFTON as the named publisher. Both developer and publisher fields now show Unknown Worlds Entertainment. KRAFTON remains the parent company of the studio and has stated it is currently focused on supporting the successful Early Access launch of Subnautica 2; the change is a storefront-listing diff, not a divestiture. Phase Two of the litigation, covering money damages and whether KRAFTON deliberately impaired the earnout, was later resolved by the July 2026 settlement described below.

5050

5151 Launch-Week EULA and Privacy Backlash

5252

5353 The Early Access launch on May 14, 2026 drew a second wave of community criticism, this time aimed at the game's end-user license agreement and privacy terms rather than the corporate dispute. As the player base climbed past two million copies in the first day, a detailed user-review breakdown of the agreement spread quickly across community forums and storefront reviews, and the terms became a recurring talking point in the launch-week Steam user reviews.

5454

5555 The objections clustered around several clauses. Players read the agreement as relinquishing aspects of digital ownership to the publisher, reserving the right to revoke a player's license and access to the game at the company's discretion, and authorizing broad collection of personal and device data, including IP addresses, hardware identifiers, email addresses, and location information. Additional clauses were read as restricting the use of VPNs, limiting streaming and fan-created content, and requiring disputes to go through binding arbitration.

5656

5757 Defenders of the terms argued that much of the language mirrors boilerplate found in other modern live-service and online-enabled games, and that the data clauses largely describe routine account and anti-cheat handling rather than anything unique to this title. Critics countered that the breadth of the license-revocation and data clauses was unusually expansive for a primarily single-player survival game and that the optional co-op component did not justify the scope.

5858

5959 The backlash arrived alongside the studio’s published Early Access roadmap and ran in parallel with otherwise strong reviews, which sat in the Very Positive range on launch day. During launch week, Unknown Worlds responded to the criticism with two adjustments delivered through the post-launch hotfixes. The May 19, 2026 hotfix gated analytics behind acceptance of the Terms of Service and reduced the volume of backend data collected. The May 22, 2026 hotfix added an in-settings telemetry disable toggle (English only at first, with localized strings to follow) and revised both the Terms of Service (preamble, limited license, gameplay-video and prohibited-use clauses, ownership, player-submitted content, liability limits, and condition transfers) and the Privacy Policy (privacy notice, data-collection methods, information-sharing practices, and security protocols). Players were required to re-accept the updated Terms of Service on next launch. The hotfix-2 changes were rolled out on all platforms, with the Xbox version following on certification clearance. See Early Access and Development Roadmap for the per-hotfix change log. The agreement and policy text remain a community talking point; coverage of any further amendments will be added here as Unknown Worlds Entertainment updates them.

60+

61+Settlement (July 2026)

62+

63+On July 1, 2026, KRAFTON and the former Unknown Worlds leadership reached a mutual settlement that ended the litigation, with both sides agreeing to dismiss all pending legal proceedings. Under the terms, KRAFTON agreed to pay the previously promised bonuses tied to the studio's performance earnout. The payout is structured as three annual installments, and eligibility was widened so that all current Unknown Worlds employees share in it rather than only those who were with the studio at the time of the 2021 acquisition. Subnautica 2's commercial success during Early Access met the revenue milestones the bonus had been tied to.

64+

65+As part of the settlement, Ted Gill stepped down as CEO of Unknown Worlds, only months after the court had reinstated him. Gill framed the departure as a mutual decision and said new leadership was the best way for the studio to move forward. KRAFTON and Unknown Worlds began searching for a new chief executive from outside both companies. The agreement closed the roughly year-long dispute that had begun with the July 2025 removal of the studio's founders.

Compare Revisions

Compare Other Revisions