New dispute emerges around Subnautica 2’s early access release [Update]
Restored CEO's legal team says this week's announcement of a May launch was improper
Lawyers for the ousted—and now partially reinstated—leadership team of Unknown Worlds, the studio behind Subnautica 2, are crying foul over news that the game will be released into early access in May.
The release announcement earlier this week was made improperly, potentially “damaging the game and sowing additional confusion among the Subnautica community,” the lawyers said in a letter sent on Tuesday to Vice Chancellor Lori Will of Delaware’s Court of Chancery.
In their letter, the lawyers also floated the idea of asking Will to find Krafton in contempt of the court’s ruling.
The letter was sent just one day after Will’s bombshell ruling that publisher Krafton had breached its contract with Unknown Worlds’ executive team, when it fired them last June.
The new issue isn’t necessarily the May early access timeframe, but how the news was announced.
The letter and Krafton’s response have not been previously reported.
A quick recap of prior events: Subnautica 2 is an unreleased, underwater survival adventure and the most-wishlisted game on Steam. Last year, longtime Unknown Worlds CEO Ted Gill, along with studio co-founders Charlie Cleveland and Max McGuire, were fired by Krafton. They swiftly sued, saying the publisher had terminated them to avoid paying out up to $250 million in potential performance-based bonuses. The studio leaders had hoped to earn that with an early access release of the game, which Krafton had blocked. The publisher argued in court that Subnautica 2 wasn’t ready, which the ousted execs disputed. On Monday, Will ruled that Krafton had violated its contract, firing the execs to avoid the performance payouts, and that it had to reinstate Gill and give him full authority over any early access release for Subnautica 2.
On Tuesday, IGN reported on a new memo issued that day to Unknown Worlds staff by Steve Papoutsis, the executive Krafton had put in charge of Unknown Worlds after the 2025 firings. In the note, Papoutsis said that Subnautica 2 had passed a key development milestone “last week” and that he and Krafton had determined the game “is ready for Early Access release in May.”
This news appeared to catch the lawyers for Gill, Cleveland and McGuire by surprise.
On Tuesday night, they sent a letter to Will expressing “serious concerns” about whether it would be possible to forge an agreement with Krafton consistent with the judge’s order.
Papoutsis’ memo was a problem, they wrote. He didn’t have the authority to declare anything about Subnautica 2’s release. As of 9am ET on Monday, March 16, the effective date of Will’s order, Papoutsis wasn’t CEO of Unknown Worlds. Gill was. And, per Will’s order, only Gill could make Subnautica 2 release decisions.
They continued:
Krafton self-servingly announced the launch without any regard to its impact on the game, the team, or the community—let alone this Court’s Opinion. Announcing the release of a game is momentous, and it is typically accompanied by significant marketing activity, fanfare, and community coordination. And most importantly, the announcement is carefully designed to maximize excitement for the game. That entire process was supposed to be driven by Mr. Gill. However, in defiance of the Court’s Opinion, Krafton has now taken that away, further damaging the game and sowing additional confusion among the Subnautica community.
The lawyers speculated that Krafton had “intentionally leaked” Papoutsis’ memo and then issued an official statement to confirm the leak.
On Wednesday, lawyers for Krafton defended their client in their own letter to vice chancellor Will, saying nothing they did violated her order nor showed contempt:
Papoutsis’s message was simply celebrating the UW employees’ efforts toward a past event: Krafton’s pre-Opinion determination that Subnautica 2 was ready for Early Access release. There was nothing improper about conveying the results of the milestone review or thanking the development team for their dedication and talent.
They added that Gill could still make his own call about Subnautica 2’s release:
In his role as CEO, Gill will be able to assess independently his views on the state of Subnautica 2 and the appropriate release schedule; nothing in Papoutsis’s message alters Gill’s authority or discretion.
Vice chancellor Will has not responded to the letters and doesn’t necessarily have to. Both parties were previously ordered by Will to confer this week and submit a proposed judgment consistent with her ruling.
The letter from Gill’s attorney’s this week doesn’t indicate whether he would or would not support a May release for Subnautica 2. But it could limit his options.
And, if Gill’s lawyers are right, the lack of marketing fanfare around the leak of the May date could dull the launch of the game. Any harm to Subnautica 2’s launch is an extra sensitive issue given the context of the legal dispute: millions of dollars of payouts are on the line, tethered to the scale of the game’s initial performance.
In her ruling on Monday, Will noted that there was obvious “bad blood” between Gill’s side and Krafton but that the two would need to work together: “They can—and must—act in good faith to navigate their remaining contractual relationship.”
Update - March 20, 10:30am ET: At 1AM Friday morning, several hours after this article ran, Gill’s lawyers filed a motion accentuating their displeasure over the May early access release and calling on the judge to force Krafton to explain why they shouldn’t be sanctioned for it:
Krafton’s actions have undermined the relief sought in this expedited phase of the litigation, in which the Founders spent nine months and millions of dollars fighting to restore their bargained-for right to determine when and how the game would launch.
Gill’s lawyers—whose clients are also known as “Fortis Advisors”—say their issue with the Papoutsis memo in IGN was exacerbated by subsequent confirmations of the May early access release window that Krafton issued to Kotaku and PC Gamer (“the timing suggests that Krafton has continued issuing confirmations even after Fortis informed Krafton’s counsel and the Court of its concerns.”)
According to the motion, Krafton announced and confirmed the May date before Gill had a chance to review the game: “Krafton put him in this position before he even had the opportunity to see the developers’ months of hard work to plan a path forward.”
They add:
While Gill is supremely confident in the skill and dedication of Unknown Worlds’ development team, they have been working for months at the direction of management that, as the Court recognized, had no prior experience with the Subnautica franchise or early access.
…
Moreover, Gill must deal with publishing agreements, launch advertising planning, and other back-end issues. He now needs to do so with the axe of fan disappointment hanging over his head if he changes the launch timing.
Gill’s team says it reserves the right to “sell all appropriate relief” including reimbursement of its legal fees.
In a separate filing Krafton’s lawyers have asked the court to resolve a disagreement over when vice chancellor Will’s ruling goes into effect. They dispute Gill’s team’s assertion that was effective 9am on Monday (prior to the Papoutis memo) and say they don’t believe it should kick in until the signing of an “implementing order” which is still being formalized.
Item 2: A new kind of couch co-op game
A highlight of GDC each year is the Alt.Ctrl showcase that features games played with extremely experimental controllers. Perusing this year’s offerings last Friday, I found a game controlled with giant scissors, another with big toothbrushes and one that amounted to dumpster diving.
My favorite was Pivot, a co-op game about collectively maneuvering a couch. It was developed by students at the University of Utah’s masters of arts and engineering games program.
Players lift and tilt the physical couch in order to control the position of a virtual one. That virtual one is moving through an obstacle course on-screen, while being pursued by a giant skull.
Developer Nishant Verma told me at GDC that the couch is made of styrofoam (this became more evident as I watched!) and that the name was a riff on an episode of the sitcom Friends.
Item 3: In brief…
🚫 Ubisoft is laying off more than 100 workers at its Red Storm studio, as the North Carolina location known for decades for its Tom Clancy games, ceases in-house game development, VGC reports.
👀 On Monday, Nvidia’s revealed its DLSS 5 AI-driven graphics technology that purports to improve game graphics… and it has been roasted about it by the media and the online gaming public for the remainder of the week.
The tech changed the faces of characters in footage from Resident Evil Requiem, Hogwarts Legacy and EA Sports FC, drawing accusations of giving carefully art-directed games the generic look of AI “slop.”
Nvidia CEO Jensen Huang had said on Monday that “DLSS 5 is the GPT moment for graphics—blending handcrafted rendering with generative AI to deliver a dramatic leap in visual realism while preserving the control artists need for creative expression.”
By mid-week, Huang was telling Tom’s Hardware that the new tech’s critics were “completely wrong” because game-makers could still “fine-tune the generative AI” to suit their game’s aesthetics.
I wanted to say how shady Krafton is being (announcing a release date? No, we're just celebrating!) but the quote about "fine-tuning the generative AI" really made me snort.
I hope that team channels Ross again to revive the stealth genre https://youtu.be/0ev_ob4mVwg?si=3Yrvct9Twdc4fhTB