When Krafton acquired Unknown Worlds Entertainment in 2021 for $500 million, the deal came with an important addendum: an additional $250 million earnout tied directly to the commercial success of Subnautica 2, the sequel to the beloved underwater survival game.
Sources state that at the time, it likely seemed like a fair arrangement for all parties. But as the sequel moved through development and internal forecasts began pointing toward a strong release, a very different atmosphere took hold inside Krafton’s leadership.
“As Unknown Worlds prepared to release its hotly anticipated sequel, Subnautica 2, the parties’ relationship fractured,” according to court documents filed in the case.
With financial projections suggesting the full earnout would almost certainly come due, CEO Changhan Kim began searching for a way out. His own internal legal and corporate advisors offered a sobering read of the situation: removing the studio’s developers would not prevent the payout, and would likely expose the company to serious legal and reputational consequences.
The warning landed in a Slack message reviewed by the court: “Hi CEO . . . it seems to be highly likely that the earn-out will still be paid if the sales goal is achieved regardless of the dismissal with cause. Therefore, there isn’t much that we can practically gain other than punishment with a simple dismissal alone, whereas I am worried that we may be exposed to lawsuit and reputation risk.”
Kim received the message. He simply chose not to act on it.
“And so Kim turned to ChatGPT for help,” the court noted, in a passage that stands out as one of the more unusual corporate governance disclosures in recent gaming industry memory. “Fearing he had agreed to a ‘pushover’ contract, Krafton’s CEO consulted an artificial intelligence chatbot to contrive a corporate ‘takeover’ strategy.”
Even the chatbot’s response offered little comfort. When ChatGPT assessed that the earnout would be “difficult to cancel,” Kim vented to a colleague that the deal had become a “contract under which we can only be dragged around.”
Rather than accepting that conclusion, he moved forward with the strategy the AI had generated. The plan, known internally as “Project X,” was broad in its ambitions and calculated in its design. On the infrastructure side, it advised “securing control points: lock down Steam/console publishing rights and access rights over code/build pipeline through both legal and technical aspects.”
For public relations, it recommended a posture of “preemptive framing: repeat that protecting quality and fan trust is the highest priority, undermine the ‘Large Corporation VS. Indie’ framing.” On the legal front, it called for “systematic materials for legal defense: prepare contract interpretation memorandums, log all communications, seek external consultation.” Personnel management was also addressed, with guidance on “team retention: operation of retention packages for key personnel and rapid backfill pipelines in anticipation of resignation/departure scenarios.”
The plan also included a financial negotiating dimension, suggesting the company “keep room for negotiations through provision stating ‘immediate removal if specific development results are achieved,'” and recommending a “two handed strategy: create a structure that allows for both hardball (Legal + Finance) and softball (Support/Incentives) approaches so moderate factions within Unknown Worlds can push for compromise.”
A public appeal to the Subnautica fan community was also part of the rollout, aimed at “securing public support from fans and legal validation of our legitimacy.” That message, which court proceedings suggest may itself have been AI-generated, did not achieve its intended purpose. Instead of rallying players behind Krafton’s position, it amplified concerns about the direction of the franchise and the motivations behind the company’s decisions.
Kim proceeded regardless, ultimately removing key developers from the project. The move triggered precisely the legal confrontation his own team had cautioned him against. A judge reviewed the facts of the case and ruled against Krafton, ordering the developers reinstated.
The litigation is still ongoing, but the early rulings have consistently and decisively favored the developers.
