One of the video-game industry's most closely watched legal fights has ended in a settlement, capping a year of acrimony between a major publisher and one of its studios.
How the dispute began
The conflict grew out of Krafton's 2021 acquisition of Unknown Worlds, a deal that included an "earnout" — additional payments of up to $250 million promised to the studio's leadership if Subnautica 2 hit certain financial targets. When Krafton removed the studio's chief executive, Ted Gill, and co-founders Charlie Cleveland and Max McGuire in July 2025, the ousted executives sued, alleging the publisher had deliberately delayed the game to avoid triggering those payments. Krafton denied wrongdoing and argued the executives had stepped back from their roles.
A court sides with the studio
The dispute went the developers' way in court. In a March 2026 ruling, a Delaware judge found that Krafton's stated reasons for the terminations were "pretextual" and ordered Gill reinstated with authority over Subnautica 2's release, Game Developer reported — effectively handing control of the bonus timeline back to the people it was meant to reward.
Subnautica 2 subsequently launched in early access and, by the developers' account, sold strongly, easing the path to a deal.
The settlement
On July 1, Krafton and Unknown Worlds announced they had settled, dropping the lawsuits, Bloomberg reported. Under the agreement, Krafton will pay bonuses not only to the three executives but to the wider Unknown Worlds staff, spread over several years — a broader payout than the original deal envisaged. The exact financial terms were not disclosed.
As part of the settlement, Gill will leave the studio. "We mutually agreed to part ways," he told Bloomberg, adding that "new leadership is the best way for the studio to move forward." The two sides said they would look for a new chief executive.
Why it matters
The case drew unusual attention because it exposed the tensions that can follow when large publishers buy independent studios on deals tied to future performance. Such "earnout" arrangements are common in games and technology acquisitions, and this dispute became a high-profile test of what happens when a studio's team believes the parent company is working against the very targets it agreed to pay for.
For players, the immediate practical effect is limited: Subnautica 2 is out and continues to be developed. But within the industry, the settlement — a rare, clear win for a studio's staff against its corporate owner — is likely to be studied closely the next time a big publisher writes an earnout into an acquisition.
