Krafton, Subnautica Developers Settle Earn-Out Bonus Lawsuit

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.

"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," an official from the company said.

"Unknown Worlds will continue leading development, with Krafton providing support for the success of the game," the official added.

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