Krafton Settles Subnautica 2 Bonus Dispute as CEO Resigns

Krafton has ended a year-long legal fight over Subnautica 2, agreeing to pay the disputed bonus it once maneuvered to avoid — and losing the studio’s chief executive in the process. The South Korean publisher settled its Delaware lawsuit with the former leadership of Unknown Worlds, and CEO Ted Gill is stepping down as part of the deal.

The plaintiff withdrew the suit and Krafton disclosed the settlement on July 1, 2026. Neither side revealed the financial terms, but the outcome reverses the position Krafton spent a year defending. Rather than escape a payout worth up to $250 million, the company has agreed to pay bonuses to Unknown Worlds’ entire staff, Bloomberg reported after speaking with Gill.

The payout now reaches everyone at the studio, including recent hires, and will be spread across three annual installments — a wider pool than the original agreement, which set the money aside mainly for the founders and the staff on hand at the 2021 acquisition. Gill said the developers would be “compensated significantly more” than that deal called for, with further incentives tied to the game’s continued success.

The deal Krafton tried to escape

Krafton bought Unknown Worlds in 2021 for $500 million up front, plus an earnout worth up to $250 million if the studio hit aggressive revenue targets. An earnout is a standard acquisition tool — a slice of the purchase price paid later, contingent on the bought business performing — and this one was designed to keep the Subnautica creators motivated. The structure was steeply leveraged: once Unknown Worlds’ revenue crossed $69.8 million, Krafton owed $3.12 for every additional dollar the studio generated, up to the $250 million cap.

The trouble started when the math turned real. By May 2025, court filings show, Krafton’s own finance team had projected a payout of around $191 million — a liability the company decided it did not want. That July, Krafton fired Gill and co-founders Charlie Cleveland and Max McGuire, removed them from the board, and installed a part-time chief executive drawn from another of its studios who had never played a Subnautica game. The founders sued in the Delaware Court of Chancery, arguing the firings and a delay to Subnautica 2 were engineered to run out the earnout clock.

In March 2026, the court sided with them. It found Krafton had breached the acquisition agreement by firing the executives without cause and seizing control of the studio, ordered Gill reinstated with authority over the game’s launch, and extended the earnout deadline to September 15, 2026 to make up for the months he was wrongly removed. Most damaging for Krafton, the ruling detailed how its chief executive, Kim Chang-han, had consulted ChatGPT for a corporate takeover strategy — chat logs that became discoverable evidence of the company’s intent.

What the settlement changes

The game itself made the dispute academic. Subnautica 2 launched in early access in May 2026 and sold more than four million copies within days, generating an estimated $100 million in its first week — one of the year’s biggest survival launches on Steam. With the revenue targets comfortably cleared, Krafton was on track to owe the earnout regardless, and still faced a pending claim for damages. Settling closed both fronts at once.

Gill’s exit is the settlement’s other headline. Reinstated by the court only months earlier, he is leaving again — this time by agreement. “We mutually agreed to part ways,” he told Bloomberg, adding that new leadership was the best path for the studio. Krafton and Unknown Worlds plan to recruit a replacement from outside both companies, and the studio will keep leading development on the game.

A costly turn for Krafton

The cash is manageable for a company this size. A payout of up to $250 million is roughly a third of the operating profit Krafton booked in all of 2025, and it lands as the publisher posts record results on the strength of PUBG and a widening slate of titles that includes the life-sim inZOI.

The heavier cost is reputational. A Delaware court found one of gaming’s most acquisitive publishers had tried to strip a studio’s founders of control to dodge a contract it had signed, and the AI-assisted paper trail behind that plan is now part of the public record. For a company that has spent heavily buying studios to build long-lived franchise IP, the case is a warning about how earnout deals can turn adversarial when an acquired studio outperforms — and how far a parent can push before a court intervenes. Krafton says its focus now is supporting Subnautica 2 to its full release, with Unknown Worlds continuing to lead the work and the search for a new studio head already underway.