The leadership of Unknown Worlds versus Krafton: a detailed analysis of the conflict with comments from lawyers

The sudden dismissal of the leaders of Unknown Worlds turned into one of the most talked-about scandals in the gaming industry in recent times. Here, we detail the conflict and the lawsuit against Krafton. To better understand the legal intricacies, we sought comments from experts at Futura Digital and Semenov&Pevzner.

The lawsuit and other legal details were commented on for App2Top by Anastasia Sukhotskaya, head of the international projects practice Futura Digital, and Irina Gushchina, senior lawyer in the IT and IP Transactions Practice at Semenov&Pevzner.

Many know Unknown Worlds for one franchise, Subnautica, although the studio itself has been in the market for over two decades. Before diving into recent events, let's briefly cover the key moments in the team's history:

2001 — Programmer and game designer Charlie Cleveland founded Unknown Worlds while working on Natural Selection, a fan mod for Half-Life released in 2002 that gained recognition from both gamers and the press.
2002–2006 — The formation of Unknown Worlds Entertainment as a full-fledged company, beginning work on Natural Selection 2, and an unsuccessful search for funding;
2006 — Unknown Worlds releases the casual puzzle Zen of Sudoku (now available for free on Steam) as a last chance to quickly earn some money;

Natural Selection was released before Steam when there was no way to monetize mods except through donations, which I did. I didn’t want to sell the majority of the company to an investor who would gain too much control, so the only way to make some money was to make a small project and sell it.

Charlie Cleveland

Founder of Unknown Worlds

2006 — Developer Max McGuire joins Unknown Worlds as a co-founder and technical director, previously one of the key specialists at Iron Lore Entertainment and the lead programmer of the Titan Quest engine;
2011–2013 — Perfect World purchases 40% of Unknown Worlds and then, after the release of Natural Selection 2, increases its stake to 60%, paying the studio 15.9 million yuan (approximately 2.4-2.5 million dollars at the average exchange rate of those years) over two deals.
2018 — The release of Subnautica, a breakthrough hit for Unknown Worlds, whose sales exceeded 5 million copies in the first two years;
2018 — Ted Gill joins Unknown Worlds as president and later CEO, previously a product director at Fandom;
2019 — Perfect World begins to sell its majority stake in the studio, retaining a 20% share, and the balance sheet value of Unknown Worlds at that time is estimated at 10.8 million dollars;
2021 — Krafton purchases Unknown Worlds from Perfect World for an astounding 500 million dollars, a huge sum for a relatively small indie studio (another 250 million dollars were set as an additional payment that the studio would receive depending on its financial results by 2026);
2025 — Was supposed to be the year of the early access release of Subnautica 2, which, if successful, was expected to ensure the achievement of target metrics for hefty bonuses for management.