Settlement Reached: Krafton to Pay Entire Staff of Unknown Worlds
In a dramatic resolution to one of the video game industry’s most contentious legal battles, Krafton has agreed to pay bonuses to the entire staff of Subnautica 2 developer Unknown Worlds Entertainment. The settlement, announced on July 1, 2026, ends a year-long dispute that centered on a $250 million earn-out bonus tied to the game’s early access performance.
According to a regulatory filing by Krafton, both parties have withdrawn all pending lawsuits and will now focus on the continued development of Subnautica 2. As part of the agreement, Unknown Worlds CEO Ted Gill has stepped down, stating that “new leadership is the best way for the studio to move forward.” Gill, who was initially fired in summer 2025 and later reinstated by court order in March 2026, told Bloomberg that the team will be “compensated significantly more” than originally agreed upon under the acquisition deal.
The bonus payout will now extend to all employees of the studio, including recent recruits, rather than just the top executives and pre-acquisition staff as originally structured. The payments will be made in three installments, with further incentives tied to the game’s ongoing success.
The Dispute That Shook the Gaming World
The $250 Million Earn-Out Clause
The conflict began shortly after Krafton acquired Unknown Worlds in October 2021 for an undisclosed sum. The deal included an earn-out provision that promised a $250 million bonus to the studio’s founders—Max McGuire, Ted Gill, and Charlie Cleveland—as well as pre-acquisition employees if Subnautica 2 hit certain revenue targets following its early access launch.
As internal projections showed Subnautica 2 on track to trigger the earn-out, Krafton CEO Changhan Kim reportedly viewed the deal as a “bad deal” and felt “taken advantage of,” according to court documents. Kim was warned by his legal department that the earn-out would still need to be paid even if the leadership was dismissed for cause, and that such action would expose the company to lawsuits and reputation risk.
Firing and Counter-Accusations
In summer 2025, Krafton fired Gill and the co-founders, citing “lack of leadership” and delays in Subnautica 2’s development. The publisher accused the trio of threatening to self-publish the game and of downloading tens of thousands of company files and emails in anticipation of legal action. The founders strenuously denied these allegations and claimed Krafton “changed its story mid-litigation.”
Gill and the co-founders immediately filed a lawsuit in the Delaware Court of Chancery, alleging that Krafton intentionally delayed the game’s release through “pressure tactics” to avoid paying the bonus. Krafton countersued, accusing the former leaders of trying to “demand a multimillion-dollar payout they haven’t earned.”
Court Ruling and Reinstatement
In March 2026, the court ruled in favor of Unknown Worlds, ordering Krafton to reinstate Gill as CEO and extend the bonus offer to staff. The ruling revealed shocking internal communications, including Kim’s admission that he considered the bonus a “bad deal” and had sought advice from ChatGPT on how to avoid it. The court found that Krafton had acted in bad faith, and the publisher was ordered to comply with the original earn-out terms.
The ruling was seen as a landmark decision for developer rights and corporate accountability in the gaming industry, signaling that publishers cannot unilaterally alter acquisition agreements when financial targets are met.
Subnautica 2: A Blockbuster Success Despite Turmoil
Record-Breaking Sales and Player Numbers
Despite the legal chaos behind the scenes, Subnautica 2 has been a massive commercial success. The underwater survival game launched in early access on May 14, 2026, for Xbox Series X|S, PC via Steam and Epic Games Store, and Xbox Game Pass. Within just six weeks, it sold over 4 million copies and achieved a peak of more than 467,000 concurrent players on Steam.
The game’s early access release was initially delayed by Krafton, a move the founders argued was deliberate to avoid triggering the earn-out. The court ruling noted that Krafton’s actions had directly contributed to the delay, which cost the studio momentum and created uncertainty among the development team.
What the Settlement Means for the Team
Under the original agreement, only the three founders and employees who were at the studio during the 2021 acquisition were eligible for the bonus. The new settlement expands the payout to every current staff member, including those hired after the acquisition. This is a significant win for the broader team, many of whom had worked under the shadow of the lawsuit for over a year.
Ted Gill said in a statement, “We’re all super excited about Subnautica 2 and its tremendous success.” He emphasized that the settlement ensures the team is fairly rewarded for their hard work. Bloomberg reported that the total compensation will be “significantly more” than initially agreed, reflecting the game’s outstanding performance.
Krafton’s New Focus: Moving Forward with Subnautica 2
New Leadership for Unknown Worlds
With Gill stepping down, Krafton will look to appoint an external CEO to lead Unknown Worlds. Gill described the departure as a mutual decision, saying, “We mutually agreed to part ways. New leadership is the best way for the studio to move forward.” The search for a new leader is expected to begin immediately, with Krafton aiming to bring in someone who can guide the studio through the full 1.0 release of Subnautica 2.
Krafton reiterated its commitment to the franchise in a statement: “Unknown Worlds and Krafton are focused on supporting Subnautica 2, its Early Access journey to the full 1.0 release and the global community that has made the franchise so special.”
The Road to Full Release
Subnautica 2 is currently in early access, with a full 1.0 release planned for 2027. The settlement clears a major legal hurdle, allowing the team to focus entirely on development. The game’s success has already cemented Subnautica as a flagship franchise for Krafton, which acquired Unknown Worlds to diversify beyond its battle royale hit PUBG: Battlegrounds.
Analysts expect Subnautica 2 to continue selling well, especially as more content is added during early access. Player feedback has been largely positive, with critics praising the game’s expansive underwater world, improved graphics, and refined survival mechanics.
Broader Implications: A Precedent for Developer Rights
Protecting Earn-Outs and Acquisition Deals
The settlement sets an important precedent for the gaming industry, particularly regarding earn-out agreements in studio acquisitions. Many developers have raised concerns that publishers could use delaying tactics or other pressure to avoid paying performance-based bonuses. The court’s decision in March, and the subsequent settlement, sends a clear message that such tactics will not be tolerated.
Legal experts noted that the case exposed the vulnerability of founders and employees in acquisition deals, especially when the parent company has conflicting incentives. The judge’s ruling highlighted Krafton’s internal attempts to circumvent the agreement, including CEO Kim’s use of ChatGPT to explore legal loopholes—a detail that drew widespread criticism and mockery online.
The Human Cost of Corporate Disputes
For the developers at Unknown Worlds, the past year has been fraught with uncertainty. The lawsuit created a toxic atmosphere, with staff caught between the founders and the publisher. Many considered leaving the studio, fearing that the bonus would never materialize. The settlement finally brings closure and financial security to the team, rewarding their patience and dedication.
The case also underscores the importance of transparent and fair communication between publishers and studios. As the gaming industry continues to consolidate, with larger companies acquiring smaller independent studios, disputes over earn-outs and creative control are likely to become more common. The Unknown Worlds settlement may serve as a template for resolving such conflicts in the future.
What’s Next for Krafton?
Krafton’s focus now shifts to damage control and rebuilding trust with the developer community. The company’s handling of the Unknown Worlds dispute has been criticized by many developers and players, but the settlement could help restore its reputation. With Subnautica 2 performing well, Krafton has a strong incentive to ensure a smooth and successful full release.
Meanwhile, the company is also dealing with other challenges, including a separate lawsuit from the founders of another acquired studio. The Unknown Worlds case may force Krafton to rethink its acquisition strategy and ensure that future deals include clearer, more enforceable earn-out provisions.
The End of a Bitter Battle
A Win for the Team
For the employees of Unknown Worlds, the settlement is a long-awaited victory. Many had worked on Subnautica 2 for years, pouring their creativity and energy into a game that has now become one of the year’s biggest hits. The bonus payout, expanded to include the entire staff, acknowledges their contributions and ensures they share in the game’s success.
Ted Gill summed up the mood in his statement to Bloomberg: “We’re all super excited about Subnautica 2 and its tremendous success.” While Gill’s departure marks the end of an era for Unknown Worlds, the studio is poised to continue its work under new leadership, with the legal nightmare finally behind them.
Looking Ahead
As Subnautica 2 continues its early access journey, fans can expect regular updates, new content, and community-driven improvements. The settlement also clears the path for potential new projects within the Subnautica universe, as Krafton has expressed interest in expanding the franchise.
The resolution of this dispute is a reminder that in the high-stakes world of video game development, the most important asset is the people who create the games. By ensuring that the entire Unknown Worlds team is fairly compensated, Krafton has taken a step toward mending fences and focusing on what truly matters: making great games.
For more on industry legal battles, see our coverage of PS Plus July 2026: 8 Games Leaving, Price Hike Fears, and a 900-Hour RPG Arrives.
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