Unknown Worlds has announced plans to self-publish its upcoming title, 'Subnautica 2.' This move has brought to the surface a conflict with its parent company, KRAFTON, regarding an earn-out agreement worth approximately $250 million.

While this may be more of a rational adjustment process for revenue distribution than a simple confrontation, it is certainly unusual for a subsidiary to reject the services of its 100% parent company to self-publish a game.

The M&A agreement between KRAFTON and Unknown Worlds is structured in favor of the subsidiary. According to internal estimates from KRAFTON’s finance team last May, if 'Subnautica 2' becomes a hit, KRAFTON would be required to pay Unknown Worlds between $191.8 million and $242.2 million (approximately ₩357.3 billion).

To ensure this payout, Unknown Worlds included defensive clauses in the contract to prevent interference from the parent company. One such provision guarantees the subsidiary operational control—including release dates, budgets, and personnel decisions—as long as at least one of three key figures, such as founder Charlie Cleveland or CEO Ted Gill, remains with the company.

CEO Ted Gill, who recently returned to his position, has revised the development direction following a nine-month delay. It appears he has played the 'self-publishing' card to maximize revenue within the extended 258-day grace period. The primary objective is interpreted as completely blocking KRAFTON’s intervention by leveraging the guaranteed operational control.

The move also suggests an intent to manage total revenue directly, eliminating potential disputes over distribution fees that a parent company might otherwise deduct when calculating the sales figures that determine the earn-out. Given that the previous title sold over 17.5 million copies and built a massive fandom, this strategy aims to prove that a development environment free from external interference will maximize initial sales.

Ultimately, CEO Ted Gill is compelled to go all-in to secure the massive earn-out. By rejecting parent company support and seizing direct service rights, he has made a high-stakes gamble to focus solely on the game’s commercial success while insulating it from external variables.

This conflict is expected to unfold in one of three directions, based on rulings from the Delaware Court of Chancery in the U.S.

It is unlikely that KRAFTON will aggressively block the release. If KRAFTON were to delay the launch in any way, it would violate the Delaware court’s preliminary injunction prohibiting management interference. Such a move would risk not only contempt of court charges but also massive punitive damages.

The most realistic scenario is a conditional settlement, where KRAFTON pays a settlement fee in advance and Unknown Worlds waives its right to claim further damages. This would allow KRAFTON to secure control as a 100% parent company and resolve legal uncertainties early.

Though less likely, the two companies could fully split, leading to independence (via a spin-off or a management buyout). In this scenario, existing management, including CEO Ted Gill, would secure external investment to buy back the stake in Unknown Worlds. This would allow KRAFTON to offset the $250 million payout burden with the proceeds from the stake sale.

Regardless of the conflict, a successful launch is positive for KRAFTON. Even if Unknown Worlds self-publishes, the performance will ultimately be reflected in KRAFTON’s consolidated financial statements. Furthermore, cash generated from the game’s success could be transferred to the parent company later through dividends or other means. Above all, KRAFTON holds a firm safety pin by maintaining 100% ownership of Unknown Worlds.

Regarding this, a KRAFTON representative stated, "We are currently focused on successfully supporting the early access launch of 'Subnautica 2.'"