Krafton and Subnautica Developers Drop Lawsuit Over Earn Out Bonuses

Krafton Inc. said in a regulatory filing Wednesday that the company and the lead developers behind the globally popular Subnautica video game franchise decided to drop their court fight over controversial earn out bonuses.

The South Korean game company and executives from Unknown Worlds Entertainment Inc. officially settled the dispute and decided to withdraw all pending lawsuits as of Tuesday, the filing read.

Krafton acquired the U.S. game studio in October 2021 in a deal aimed at diversifying its portfolio beyond its flagship shooter PUBG: Battlegrounds.

At the time, the company highlighted the studio's strong intellectual properties and reputation for globally appealing, community-driven gameplay experiences, such as the hit underwater survival game Subnautica.

Last year, the Korean game company removed the co-founders and Chief Executive Officer (CEO) Ted Gill from their positions, citing what it described as a lack of leadership and delays in the development of Subnautica 2, an underwater survival game.

In response, the former Unknown Worlds leaders filed a lawsuit against Krafton with the Delaware Court of Chancery, alleging a breach of contract. They claimed Krafton sought to avoid issuing a US$250 million bonus payment, or earn out, by intentionally delaying the game through "pressure tactics."

In March, the U.S. court ruled in favor of Unknown Worlds, and ordered Krafton to reinstate the removed game studio executives.

"Krafton and Unknown Worlds are focusing on the development and official launch of Subnautica 2, putting fan experience as our utmost priority," an official from the South Korean game company said.

"Going forward, Unknown World will continue to lead the development, while Krafton will continue to provide support necessary for the game's success," the official added.

More than 4 million copies of Subnautica 2 were sold after the early access launch of the game in May.