A dispute between developer Hound13 and publisher Webzen over the open-world collectible action RPG "Dragon Sword" has escalated.

Hound13 on Thursday released an official Q&A, rebutting Webzen's position point by point. The two sides' claims clash head-on over key issues including the contract payment ratio, how the release schedule was adjusted and conditions for additional investment.

Hound13 said the "Dragon Sword" publishing contract was structured so it would receive only a minimum guarantee, without any licensing fee, paid at the time of launch. Because the deal ran alongside an investment agreement under which Webzen acquired a 25 percent stake in Hound13 to become its second-largest shareholder, the contract amount was smaller than usual and the payment timing was set for after launch in full. Webzen said it made advance minimum-guarantee payments in two rounds in December last year and January this year, but Hound13 countered that it received only 20 percent one month before launch and 20 percent on the day of launch, and never received the remaining 60 percent.

The two sides also differ over the release schedule. Webzen said the originally agreed development completion date was March 2025, but the developer repeatedly requested delays. Hound13 countered that the completion date agreed at the time of the contract was in the third quarter and said a closed beta test in May proceeded as scheduled. It said development was completed with a goal of a November release, but it changed the launch date to January 2026 at Webzen's request after the release schedule for "Aion2" was confirmed.

Webzen said it proposed additional investment in operating funds for at least 1 year to prevent service suspension due to the developer's lack of funds. Hound13 said Webzen's proposed terms involved making a new investment at par value, which it said was several hundredths of the previous investment price, securing a majority stake and bringing Hound13 under its control as a subsidiary. Hound13 said its chief executive expressed willingness to give up his own stake, but talks collapsed because there was no way for him alone to resolve the dilution issue for existing shareholders.

Hound13 said the direct trigger for its notice of contract termination was Webzen's response at a shareholders' meeting that it was reviewing plans to suspend "Dragon Sword" service and issue full refunds, and therefore could not pay the minimum guarantee. It said Webzen shared no information on domestic and overseas promotion and marketing plans, and that finding a new publisher was its only option.

Webzen said it is taking "very seriously" the fact that a contract termination notice and a public announcement were made at the same time without prior agreement while discussions were under way.

Webzen said it will implement measures to halt payment functions and provide full refunds of all payments made from after launch to the present because Hound13 stopped responding to live service issues. Hound13 countered that full refunds would be understood as abandoning the service, and said what users want is not refunds but the normal continuation of service.

On the possibility of a lawsuit, Hound13 said Webzen also acknowledges non-payment of contract money and that legal responsibility could be pursued, but it said litigation is a method it does not want to choose until the end and that it hopes to prioritise a negotiated solution.