TL;DR
Krafton will pay bonuses to all Unknown Worlds staff after settling the $250 million Subnautica 2 earnout dispute. CEO Ted Gill is stepping down.
Krafton has agreed to pay bonuses to the entire staff of Unknown Worlds Entertainment, the studio behind Subnautica 2, after reaching a legal settlement with the company’s chief executive and co-founders. CEO Ted Gill told Bloomberg he is stepping down as part of the deal. “We mutually agreed to part ways,” Gill said.
The settlement ends a year of litigation that became one of the strangest corporate governance episodes in gaming history. Krafton bought Unknown Worlds in 2021 for $500 million, plus a $250 million earnout tied to financial targets. Last summer, Krafton fired Gill and co-founders Charlie Cleveland and Max McGuire, claiming they had neglected their duties.
The three executives sued, alleging Krafton had fired them and delayed Subnautica 2 specifically to avoid paying the bonus. A Delaware judge sided with the executives in March, ordering Krafton to reinstate Gill and extend the earnout period. In the ruling, the judge found that Krafton CEO Changhan Kim had consulted ChatGPT for advice on how to get out of paying the bonus.
The ChatGPT detail drew widespread attention. According to court filings, Kim used the chatbot to help plan what Krafton internally called “Project X,” a strategy to renegotiate the earnout and seize operational control of the studio. The judge found that Krafton had breached its acquisition agreement by terminating the executives without valid cause.
Under the settlement, developers who worked on Subnautica 2 will be “compensated significantly more” than the original acquisition agreement called for, Gill said. The payout has also been expanded beyond the original terms: the bonus was initially structured to compensate only the three top executives and staff who were at the company during the 2021 acquisition, but now everyone at the studio will receive a share, including recent hires. Payments will be made in three annual installments.
Subnautica 2 has sold more than four million copies since its early access launch in May, generating an estimated $100 million in revenue within its first week. The game’s commercial success effectively proved the executives’ argument that Krafton had tried to sabotage a hit to avoid rewarding the team that built it.
Krafton and Unknown Worlds will now search for a new CEO from outside both companies, Gill said. Krafton did not immediately respond to a request for comment. The settlement also means the remaining monetary damages litigation flagged by the Delaware court will not proceed.
The case stands as a cautionary tale about how gaming acquisitions can go wrong when a publisher’s financial incentives clash with the people who actually make the games. It also produced what may be the most expensive ChatGPT consultation in corporate history, a detail unlikely to be forgotten by executives who prefer to keep AI out of high-stakes decisions.
