Last week saw a major thunderstorm of events: Subnautica 2 got its early access delayed to 2026, while the game’s original heads of development—the management team behind studio Unknown Worlds Entertainment—got laid off, including co-founders and CEOs. While the game’s not canned, its future is…not looking too bright, let’s say.
Meanwhile, South Korean publisher Krafton brought in new leadership in order to speed up what they’re seeing as a lackluster pace of development. Things were said here and there and, now, we have a lawsuit and people getting slammed across the media.
There’s a lot to unpack, so let’s quickly dive in and try to establish a timeline in order to make sense of all this:
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Subnautica 2: The Good, The Bad, and The Ugly
Key people involved
In a nutshell: 5 people, 2 companies, in a time period that spans a bunch of years.
- Unknown Worlds Entertainment (UWE): Original developer of Subnautica series.
- Krafton: South Korean publisher, acquired UWE in October, 2021.
- Charlie Cleveland: Co-founder and Game Director of Unknown Worlds Entertainment.
- Max McGuire: Co-founder and Technical Director of Unknown Worlds Entertainment.
- Ted Gill: Former CEO of Unknown Worlds Entertainment.
- Steve Papoutsis: New CEO of Unknown Worlds Entertainment (appointed by Krafton).
- Damian Lee: Former head of Krafton’s Investment Department.
What happened and when
Here’s where things get really complicated. Unknown Worlds Entertainment (UWE) is the original developer behind the first Subnautica game. Originally launched in 2018, the game garnered glowing reviews, quickly rising to that year’s main surprises: by the end of the review cycle, not a single media outlet or critic gave it less than a 8/10 score, and Metacritic itself establishes it at 80/100 at the worst. By the beginning of 2020, the game had sold over 5 million copies.
Its major success got UWE on Krafton’s (of PlayerUnknown’s Battlegrounds and TERA’s fame) radar, and the two companies began talks of acquisition. This, in turn, would be finalized in 2021, at a value of US$ 500 million payout and a US$ 250 million earnout depending on Subnautica 2’s sales performance. Back then, Krafton stated that UWE would still be operating independently under the same banner it always had.
That changed a bit later, since right after the acquisition, Krafton announced Unknown Worlds Entertainment was developing a “new genre-defining game” for early access in 2022. This would eventually turn out to be the ill-fated Moonbreaker, launched on September 29, 2022, as a digital miniature strategy game, but faced criticism over microtransactions before they were removed. The game did not achieve the hoped-for success, garnering a mere 4.9 average on Metacritic’s user ratings—and no score at all on critics rating, as not even 4 professional reviews of it were made.
Meanwhile, development of the Subnautica sequel was confirmed on April 7, 2022, with Krafton’s November 2023 reports projecting a 2025 release. On February 8, 2024, Krafton described Subnautica 2 as a “multiplayer live-service game,” causing fan backlash and prompting developers to clarify “no season passes, no battle passes, no subscription.” Screenshots began to surface in 2024, and a cinematic teaser on October 17, 2024, confirmed a 2025 early access launch on PC and Xbox. Developer vlogs showcasing co-op and new content followed from April 23, 2025, suggesting development was on track.
However, behind the scenes, internal Krafton documents dated at around May 2025 (later leaked, as you’ll see below) suggested the entire project lacked the “volume expected of a sequel” and needed more “polish and market impact,” proposing content enhancements before launch.
Layoffs, delays and the legal war starts
Things officially went FUBAR on July 2, 2025, when Krafton publicly announced a “significant leadership change” at Unknown Worlds Entertainment. Co-founders Charlie Cleveland (game director) and Max McGuire (technical director), along with CEO Ted Gill, were “removed,” with Steve Papoutsis appointed as the new CEO. Krafton vaguely cited a need for “renewed energy” and a “faster development cycle.”
Just two days later, on July 4, 2025, Charlie Cleveland publicly responded, expressing “shock” and asserting that Subnautica 2 was, in his view, “ready for early access release” in 2025 as planned.
The true stakes became clear around July 7-8, 2025, when reports surfaced that Krafton would delay the game’s early access to 2026. This delay was immediately linked to the $250 million “earnout” bonus mentioned earlier, effectively jeopardizing the payout for the former executives.
On July 10, 2025, Krafton issued a lengthy public statement confirming the 2026 delay. They accused the former leadership of “abandoning their responsibilities,” claiming Cleveland prioritized a “personal film project” over Subnautica 2 after Moonbreaker’s failure. Krafton stated that 90% of the earnout was allocated to the three former executives, maintaining the delay was for quality, not financial reasons.
However, the very same day, Charlie Cleveland fought back. He announced that he and the other ousted Unknown Worlds Entertainment co-founders filed a lawsuit against Krafton, as detailed on his website. He stated “this needs to be made right” for his life’s work, calling the situation “explosive and surreal.”
Further solidifying Krafton’s stance, on July 12, 2025, they confirmed the authenticity of the previously leaked internal documents. These slides reportedly showed only one major biome, an introductory region, 12 creatures, and fewer vehicles complete compared to original plans.
The fallout continued on July 14, 2025, when Damian Lee, a former head of Krafton’s Investment Department who led the UWE acquisition, hinted on LinkedIn that he might testify, offering a more nuanced perspective on the dispute.
As of July 15, 2025, the legal battle is underway, with both sides holding firm. Public sentiment largely favors the former Unknown Worlds Entertainment developers, and calls for boycotts of the entire game boycotts are circulating among fans.
So yeah, this saga is far from over: it just sucks for the players that the sequel is seemingly taking a while longer to arrive—especially after the first game drew such massively positive impressions. It was, for a time, one of the biggest things to be featured on small, TikTok clips—which you know is a solid indication of a game’s public appreciation.
Still, the entire discussion will take a while to die down, so make sure to stick around to know of any updates!
