Patch Notes #13: Trump’s video game funding cuts laid bare and Krafton’s wild public feud with Subnautica developers

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Subnautica 2 artwork via Unknown Worlds / Patch Notes logo via Game Developer

We’re only 11 days into the month but it’s fair to say July has been A LOT. We’re still attempting to unpack Microsoft’s latest layoff round, but it’s a slow process because the company has decided to ignore the deluge of emails we sent over asking for more details about division-specific cuts and the impact they’ll have on workers and partner studios. Strangely, though, the company did reach out to wax lyrical about a new accessibility initiative. It’s nice to know some messages are getting through—even if they’re only flowing in one direction.

Meanwhile, Ubisoft and Testronic proved the game industry remains incapable of going one week without a spate of layoffs after cutting roles at Red Storm Entertainment and Secret 6 Madrid, respectively. Not to be outdone, Krafton entered into a very public feud with three (now former) executives at Subnautica developer Unknown Worlds a week after they departed the studio. After choosing to delay the early access launch of Subnautica 2 until 2026—a move Bloomberg claims will result in Unknown Worlds devs missing out on a $250 million bonus—Krafton attempted to set the record straight with a wild statement that accused Unknown Worlds’ executive team of essentially downing tools. More on that below.

Related:Nintendo is discontinuing Switch Game Vouchers

Fortunately, there was a fair bit of positive news this week. SAG-AFTRA union workers ratified a new interactive media contract that will usher in AI protections and wage increases for performers in the game industry. Over in Blighty, the UK government formed a new UK Video Games Council that will help drive its “pro-games growth agenda.” I have seen some chatter about a lack of regional representation on the council, but overall this seems like a positive step for the UK video game industry. Romero Games also told us there is hope for the studio after it was wrongly claimed the Irish company had shuttered. The team is still working through a dire situation after losing funding in the blink of an eye, but it isn’t down and out just yet.

Still have an appetite for even more headlines? Good, because we’ve got plenty.

Trump funding cuts ‘devastate’ video game research and development

via Game Developer // In her first (of many) piece for Game Developer, veteran reporter Nicole Carpenter spoke to video game researchers, developers, and preservationists who have had the rug pulled out from under them as a result of U.S. president Donald Trump’s debilitating funding cuts. It’s a vital if rather sobering read that underlines how the game industry is already suffering under the current regime. “The video game industry is at the forefront of experimentation and exploration in technological developments in many realms,” said one researcher who lost almost $200,000 in funding. “By limiting research in this industry, it is limiting science as a whole.”

Related:Codev specialist Side partners with Savvy Games Group to open Riyadh studio

Xbox’s ‘Golden Handcuffs’ Are Screwing Over Laid Off Workers

via Aftermath // Losing your job as a result of mass layoffs after your employer just spent $70 billion on a colossal merger is bad enough, but some Xbox workers who were punted out of the door by Microsoft last week also stand to lose uninvested shares worth a pretty penny. Aftermath reporter Like Plunkett has done a fantastic job explaining how the ‘golden handcuffs’ Microsoft graciously offers to slap on employees can sometimes result in workers losing thousands of dollars in uninvested stock when they’re kicked to the curb. What happens to all of that potential wealth? It goes straight back into Microsoft’s coffers, of course.

UK minister forms UK Video Games Council to drive ‘pro-games growth agenda’

via Game Developer // The UK government wants to supercharge the country’s video game industry with the formation of a new UK Video Game Council that will provide strategic advice on policies that could impact the sector. The 14-person council is chaired by Rebellion Games CEO Jason Kingsley CBE and Outright Games chair Nick Button-Brown. It will meet with UK minister for the creative industries, arts and tourism, Chris Bryant MP, twice a year to help the government (in the words of Bryant) “make the UK the best place globally to invest in creativity and innovation.”

Related:Report: Krafton allegedly delays Subnautica 2 to avoid paying devs $250M bonus

SAG-AFTRA members ratify new interactive media contract

via Game Developer // Members of U.S. actor union SAG-AFTRA  have agreed to the terms of a new contract that will provide AI protections and better compensation to performers working in the video game industry. The contract, which covers work with major studios like Warner Bros. Interactive, Take-Two, and Electronic Arts, was ratified after a month-long voting process and follows a high-profile strike that saw SAG-AFTRA members down tools in a bid to secure a better future. 

Tom Clancy, Star Trek: Bridge Crew Studio Ubisoft Red Storm Lays Off 19, Citing ‘Global Cost-saving Efforts’

via IGN // You might think your job would be safe for a brief moment if your employer netted a cool $1.25 billion from a Chinese conglomerate just a few months ago. If you work for a company named Ubisoft, however, you’d be dead wrong. The French publisher this week told IGN it had cut 19 roles at Tom Clancy developer Red Storm Entertainment as part of its ongoing restructuring efforts. That downsizing program has so far resulted in multiple studio closures and layoffs on a global scale, and it looks like the Assassin’s Creed maker is prepared to continue putting employees to the sword.

Report: Testronic to shutter outsourcing studio Secret 6 Madrid

via Game Developer // Support studio Secret 6 Madrid has seemingly been marked for closure by owner Testronic around three years after it was acquired by the company. Secret 6 Madrid lead game producer Patricia Menéndez was one of a number of workers to share the news on Linkedin and claimed that 42 people will lose their jobs as a result. Testronic was called out by multiple staffers for mismanagement, with one person claiming Secret 6 Madrid was left to “die” by its parent company.

Romero Games in talks with new publishers after Microsoft reportedly cancels project funding

via Game Developer // Romero Games had to abruptly cancel a project and make layoffs last week after a publisher (reported to be Microsoft) pulled funding overnight. Some former employees claimed the studio was closing for good, but Romero Games has since quashed those rumours and says it’s now in talks with a number of publishers that have expressed interest in bringing the team’s unnamed shooter to market. In a statement sent to Game Developer, studio boss Brenda Romero underlined the severity of the situation but said there is room for optimism. “We were in the studio today talking with the team about our options and next steps,” she added. “Make no mistake that it’s certainly a concerning situation, but we’re hopeful.”

Krafton Delays ‘Subnautica 2’ Game Ahead of $250 Million Payout

via Bloomberg (Paywalled) // Last week, the three co-founders of Subnautica developer Unknown Worlds all departed under vague circumstances. Now, Bloomberg is reporting that Subnautica 2 has been delayed by publisher and Unknown Worlds parent company Krafton so it can avoid paying out a whopping $250 million bonus to the development team. Krafton confirmed the delay but said the decision not “influenced by any contractual or financial considerations.” Bloomberg, however, said it reviewed a purchase agreement that shows Krafton was required to hand over the moolah if Unknown Worlds hit certain targets by 2025. Krafton, though, quickly fired back…

Inevitable Leadership Change Driven by Project Abandonment–Despite Holding 90% of Earnout for Themselves

via Krafton // In a post slapped front-and-centre on the Krafton website and fired out to journalists, Krafton publicly accused former Unknown Worlds CEO Ted Gill, game director Charlie Cleveland, and technical director Max McGuire of abandoning their responsibilities on Subnatica 2, resulting in “repeated confusion in direction and significant delays in the overall project schedule.” The company said it is “deeply disappointed by the former leadership’s conduct” and feels a “profound sense of betrayal by their failure to honor the trust placed in them by our fans.” The full statement is a truly remarkable read, with Krafton even claiming Cleveland prioritized work on a personal film project over developing Subnautica 2. The South Korean company also said the three former executives would have earned roughly 90 percent of the $250 million earnout that was unearthed by Bloomberg. It seems reasonable to suspect this might be the beginning of a very public war of words. 

In response to MS layoffs, EA Japan exec says foreign businesses “demand short-term results” from investments that require more time 

via Automaton // EA Japan general manager Shaun Noguchi has called out Microsoft after the company announced another sweeping round of layoffs that resulted in the closure of at least one internal studio and multiple project cancellations. In a post on X, Noguchi suggested Microsoft was hamstringing its development teams by chasing short-term results from large-scale investments purely to appease investors. “The frustration of seeing something you’ve been building for so long never make it to the world, and the reality that gamers who were looking forward to it will never even get to play it. Both are incredibly disappointing,” he added, lamenting the impact of the layoffs. 

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