Subnautica 2 has crossed 5 million copies sold, according to multiple sales trackers reporting in July 2026, a milestone that would be a routine success story for almost any other early-access survival game. For Subnautica 2, it is the punchline to a year-long corporate drama that involved a $500 million acquisition, a $250 million bonus dispute, three fired executives, a Delaware judge, and a gaming-company CEO who reportedly turned to ChatGPT instead of his own legal team. The lawsuit ended in a settlement on July 1, 2026. The sales numbers that followed have made it very hard for publisher Krafton to argue it was ever right.
What Happened: Subnautica 2 Crosses 5 Million Sales
Subnautica 2 launched in early access on May 14, 2026, at 8:00 a.m. PDT, priced at $29.99 on Steam, the Epic Games Store, and Xbox Series X|S, with day-one availability on Xbox Game Pass and PC Game Pass, according to Forbes. Neither a PlayStation 5 nor a Nintendo Switch 2 version has been announced. The game shipped with several biomes, creatures, crafting systems, and four-player online multiplayer already playable, with a two-to-three-year early access roadmap promised for additional content.
The sales velocity out of the gate was immediate: 1 million copies sold in the first hour on Steam alone, doubling to 2 million within 12 hours. Within a week, sales passed 4 million copies and more than $100 million in revenue, according to GamesRadar+. By early-to-mid July, that figure had climbed past 5 million, arriving alongside a content update developer Unknown Worlds is treating as proof it can keep shipping without its former publisher-installed leadership standing over its shoulder.
The timing matters. Five million sales is close to the exact kind of commercial performance that triggered the underlying $250 million bonus dispute in the first place – a dispute that, until three months ago, had publisher Krafton arguing in a Delaware courtroom that its own studio’s leadership needed to be removed “for cause.”
The $250 Million Earnout That Started a War
Krafton, the South Korean publisher best known as the maker of PUBG: Battlegrounds, acquired Unknown Worlds Entertainment – the studio behind the original Subnautica and Natural Selection – in October 2021 for $500 million, according to Krafton’s own acquisition announcement. Buried in that deal was a standard-looking earnout clause: up to $250 million in additional payouts to Unknown Worlds’ leadership and staff if Subnautica 2 hit specific revenue and performance targets by the end of 2025.
Earnouts like this are common in games-industry acquisitions – they let a publisher pay less upfront and shift risk onto the studio’s future performance, while giving founders an incentive to stay and deliver. They only work, however, if the acquiring company doesn’t have a financial incentive to make sure the target is missed. That is exactly what Unknown Worlds’ founders accused Krafton of engineering as the 2025 deadline approached and Subnautica 2’s release kept slipping.
Summer 2025: Krafton Fires the Founders It Needed Most
In July 2025, Krafton removed Unknown Worlds CEO Ted Gill and co-founders Charlie Cleveland and Max McGuire “effective immediately,” installing Steve Papoutsis – CEO of Krafton’s own Striking Distance Studios – as the new head of Unknown Worlds. Krafton’s public justification was that the trio had failed to deliver the game on schedule.
Gill, Cleveland, and McGuire saw it differently and sued, alleging in Delaware Chancery Court that Krafton had fired them without valid cause specifically to avoid triggering the $250 million earnout, and had gone on to interfere with Subnautica 2’s early access launch to run out the clock on the 2025 performance deadline, as reported by Kotaku. The case ended up splitting into two questions for the court: whether Krafton had wrongly interfered with the game’s release, and separately, whether that interference had wrongly impaired the executives’ earnout.
Inside “Project X”: How ChatGPT Became a Corporate Strategist
The detail that turned a routine earnout dispute into a national tech story was what surfaced in discovery: Krafton CEO Changhan Kim had reportedly turned to ChatGPT for strategic guidance on how to unwind the earnout obligation, according to Fortune and 404 Media, both of which reviewed court filings from the case.
Per that reporting, Kim had already been told that dismissing the executives “for cause” would not, on its own, eliminate the $250 million obligation without exposing Krafton to legal and reputational risk. Rather than dropping the idea, court records indicate Kim pressed a chatbot for alternatives. When the model’s first answer was that the earnout would be “difficult to cancel,” Kim reportedly pushed further, and the chatbot produced a detailed, multi-stage plan internally referred to as “Project X.”
According to the court filings described by Fortune, the plan called for Krafton to: form an internal task force to renegotiate the earnout or force a takeover of the studio; if that failed, “lock down” Steam and console publishing rights along with control of the game’s source code; and frame the entire dispute publicly as being about “fan trust” and “quality” rather than about money. Krafton’s leadership then largely followed that script – right down to removing itself as publisher of record on Subnautica 2’s Steam store page (the game remains listed there only under “Franchise”), a concrete, player-visible sign of the operational tug-of-war, as noted by Game Developer.
The Delaware Ruling: Krafton Loses on the Merits
On March 17, 2026, Delaware Court of Chancery Vice Chancellor Lori Will ruled against Krafton. Her decision found that the company had breached the acquisition agreement by terminating the “Key Employees” without valid cause and by improperly seizing operational control of Unknown Worlds – the exact opposite of the independent-operation guarantees Krafton had made when it bought the studio in 2021.
The remedy was specific rather than sweeping: Gill was ordered reinstated as CEO of Unknown Worlds, while the same reinstatement order did not extend to co-founders Cleveland and McGuire, according to Game Developer’s reporting on the ruling. The court also pushed back the earnout’s performance deadline, giving Unknown Worlds a genuine window to hit its sales targets without a publisher-installed CEO working against the clock. Krafton’s damages exposure – on top of whatever the earnout itself was worth – remained a live, separate question for further litigation at that point.
Reinstating a fired executive by court order is already unusual. Reinstating one after a judge concluded the CEO of the parent company used a chatbot to help engineer the firing is the kind of detail that turns a niche earnout dispute into front-page technology news.
The July 2026 Settlement: Reinstated, Then Gone by Choice
Krafton and Unknown Worlds reached a final settlement on July 1, 2026, closing out the litigation entirely. Neither side disclosed the exact dollar terms of the settlement, but the structure was a clear win for Unknown Worlds’ rank and file: bonus eligibility was expanded to all Unknown Worlds employees, not just those on staff since the 2021 acquisition, with payouts to be distributed in three annual installments. Staff will reportedly be compensated “significantly more” than the studio’s original bonus terms specified, based on reporting from PC Gamer.
Gill’s part in the ending is the strangest twist in a story full of them: having just been ordered reinstated as CEO by a Delaware judge, he immediately agreed to step down anyway. “New leadership is the best way for the studio to move forward,” he said, according to Kotaku. Krafton and Unknown Worlds are now jointly searching for an external CEO – meaning the studio Krafton spent a year trying to seize operational control of is, for the moment, being run without a permanent chief executive from either side of the dispute.
Subnautica 2 vs. the Original: By the Numbers
Comparing Subnautica 2’s early access performance to the original Subnautica’s release history shows just how much faster the sequel is moving – and why Krafton’s earnout math looked so different in 2021 than it does today.
| Metric | Original Subnautica | Subnautica 2 |
|---|---|---|
| Early access launch | December 2014 (Steam) | May 14, 2026 (Steam, Epic, Xbox Series X|S) |
| Full 1.0 release | January 2018 | Not yet released (early access) |
| Launch price | Varied by region and store | $29.99 |
| Copies sold by ~2 months post-launch | Not publicly milestone-tracked at this pace | 5 million+ (by mid-July 2026) |
| Copies sold by ~2 years post-1.0 | 5.23 million (2020, consoles + PC) | N/A – already past this pace |
| Notable promotion | 4.5 million free Epic Games Store downloads (2019) | None to date |
| Franchise lifetime total | 18.5 million+ (Subnautica + Below Zero combined) | Contributing to franchise total, tracked separately above |
| Console availability | PS4, Xbox One, Switch (added post-launch) | None announced (PC/Xbox Series X|S only) |
Sources: VGChartz, Game Developer, RaillyNews.
The original Subnautica took roughly two years post-launch to reach the same 5-million-unit territory Subnautica 2 hit in about two months of early access. That gap is precisely why the $250 million earnout, which looked like a stretch target in 2021, started to look achievable well ahead of the original 2025 deadline – and why the founders argued Krafton had a growing financial motive to make sure they weren’t around to collect it.
Timeline: From Acquisition to Settlement
| Date | Event |
|---|---|
| October 2021 | Krafton acquires Unknown Worlds for $500M, plus a $250M earnout tied to Subnautica 2 performance |
| July 2025 | Krafton fires CEO Ted Gill and co-founders Charlie Cleveland and Max McGuire; installs Steve Papoutsis as CEO |
| Summer 2025 | Fired executives sue in Delaware Chancery Court, alleging the firings were designed to dodge the earnout |
| March 17, 2026 | Vice Chancellor Lori Will rules against Krafton; orders Gill reinstated; reveals CEO’s ChatGPT-drafted “Project X” strategy |
| May 14, 2026 | Subnautica 2 launches in early access at $29.99; 2M copies sold within 12 hours |
| Late May 2026 | Sales pass 4 million copies and $100M+ in revenue within the first week |
| July 1, 2026 | Krafton and Unknown Worlds settle; bonus payouts expanded to all staff; Gill voluntarily steps down as CEO |
| Mid-July 2026 | Subnautica 2 surpasses 5 million copies sold |
Sources: Krafton, Fortune, Kotaku.
Market Impact: What This Actually Costs Krafton
Financially, the immediate damage to Krafton looks contained. The company’s broader results have continued to be carried by PUBG: Battlegrounds, and nothing in the public reporting around the settlement suggests the earnout dispute meaningfully dented Krafton’s overall corporate performance the way, say, a failed platform launch might. The $250 million at stake – even paid out in full, on top of undisclosed settlement terms – is a manageable line item for a publisher of Krafton’s size.
The reputational cost is a different story, and harder to put a number on. Krafton now has a permanent, easily searchable case study attached to its name: a Delaware court found its CEO used a consumer chatbot to help engineer the removal of the founders of one of its most successful studios, in order to avoid paying them money a contract already promised. For a publisher that depends on acquiring and retaining independent studios – Unknown Worlds is one of at least six such studios under Krafton’s umbrella – that is a difficult story to tell the next founder being pitched an earnout deal.
There’s also a structural cost: the settlement’s expanded bonus pool (covering employees hired after 2021, not just the original acquisition-era staff) sets a precedent other Krafton studios, and possibly other publishers’ recently acquired studios, may now point to in their own compensation negotiations.
The AI Governance Problem Every Studio Now Faces
Strip away the gaming context, and the Krafton case is really a corporate-governance and AI-risk story. A sitting CEO, facing a $250 million contractual obligation, reportedly treated a general-purpose chatbot as a substitute for specialized legal counsel – and a Delaware judge’s ruling became, in effect, a public record of that chatbot’s advice being used to justify terminating executives. That is a novel kind of legal exposure: not an AI model hallucinating a fact, but an AI model’s strategic suggestions becoming Exhibit A in a breach-of-contract finding.
It isn’t the first time a chatbot has caused a legal headache. In the well-documented 2023 case Mata v. Avianca, attorney Steven Schwartz submitted a court filing containing fabricated case citations generated by ChatGPT, resulting in sanctions and international coverage of “AI hallucination” as a legal risk. The Krafton case is arguably more serious: it isn’t a junior associate cutting corners on legal research, but a CEO allegedly using a chatbot to help design a corporate strategy that a court later found to be an outright contract breach.
Corporate legal and compliance teams reading the Delaware ruling now have a concrete example of exactly what not to do: don’t let executives use consumer AI tools to route around advice from in-house or outside counsel on matters with nine-figure contractual stakes, and assume anything typed into a chatbot in the course of business may eventually surface in discovery. Court filings are public. Chat logs, it turns out, can be too.
Competitive Comparison: 2026’s Other Legal-Drama Survival Hit
Subnautica 2 isn’t even the only 2026 survival-genre breakout that launched while tangled up in litigation. Palworld’s 1.0 release on July 10, 2026, arrived with the game already past 32 million lifetime players and a Steam concurrent-player count high enough to rank #2 all-time on the platform – while developer Pocketpair was simultaneously working through a Nintendo patent lawsuit that had, by the time of the 1.0 launch, been reported to have collapsed to roughly $30,000 in damages, a fraction of what Nintendo originally sought.
The parallel is notable: two of the biggest survival-game commercial stories of mid-2026 both come with a legal subplot attached, and in both cases the legal drama turned out to be far less threatening to the studio than initially feared. The difference is in who was suing whom. Pocketpair was defending itself against an outside patent claim from Nintendo. Unknown Worlds was fighting its own parent company over money it had already been promised. The Subnautica 2 case is arguably the more damaging one for the industry’s acquisition playbook, because it isn’t a competitor testing IP boundaries – it’s a publisher accused of trying to cheat the studio it bought.
Historical Context: Krafton’s Studio Playbook Since 2021
Krafton has spent the years since PUBG’s breakout success building a portfolio of semi-independent studios rather than relying on a single hit. Alongside PUBG Studios and Striking Distance Studios, Krafton’s stable includes Bluehole Studio, RisingWings, and Dreamotion, with Unknown Worlds joining as roughly its sixth independent studio after the 2021 deal. Krafton’s acquisitions since then have included Neon Giant and Dreamotion in 2021, Tango Gameworks in August 2024, and a controlling stake in Indian mobile developer Nautilus Mobile for $14 million in March 2025.
The Unknown Worlds case is the first of these deals to end up in a Delaware courtroom with a judge issuing written findings against Krafton’s leadership. That matters for how the next acquisition target – or the next studio already inside Krafton’s portfolio negotiating a renewal or bonus structure – reads the fine print. “Independent operation” clauses of the kind Krafton allegedly violated are standard in game-studio acquisitions specifically because founders want assurance the parent company won’t just wait out the earnout clock. This case is now the reference point for what happens when a publisher tries anyway.
What Happens Next: 5 Predictions
- Krafton’s other studio agreements get a second look. Boards and legal teams at Krafton’s other semi-independent studios – and at rival publishers with similar earnout structures – are likely to revisit those contracts now that a court has spelled out what “improper operational control” looks like in practice.
- AI-usage policies for executives become a real compliance item. Expect more companies to explicitly restrict or log the use of consumer AI chatbots for legal and strategic decisions involving material contracts, specifically citing this case as the cautionary example.
- The external CEO search becomes a test case. Whoever Krafton and Unknown Worlds agree on to permanently lead the studio will be watched closely by the development team and by fans as a signal of whether Krafton actually intends to leave the studio independent going forward.
- Subnautica 2 keeps closing the gap on the original franchise’s 18.5 million lifetime total as early access continues and Unknown Worlds ships its promised multi-year content roadmap, though any move to PlayStation 5 or Switch 2 – following the original game’s eventual console path – has not been confirmed by the studio.
- More 2021-vintage earnout disputes may surface. Krafton, along with several other publishers, went through an aggressive studio-acquisition phase in 2020-2022 using similar earnout structures; as those performance windows close out through 2026 and 2027, this case gives founders at other studios a public playbook for challenging a publisher that slow-walks a launch.
Related Coverage
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- Valve Steam Antitrust Trial: 32,000 Devs, $3.1B [2026]
- Xbox Layoffs: 3,200 Jobs Cut, 4 Studios Divested [2026]
- Shadow AI: 20% of Breaches, $670K Cost [2026]
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Frequently Asked Questions
What is the Subnautica 2 and Krafton lawsuit actually about?
It’s a dispute over a $250 million earnout from Krafton’s 2021 acquisition of Unknown Worlds Entertainment. Three Unknown Worlds executives, including CEO Ted Gill, alleged that Krafton fired them in July 2025 and interfered with Subnautica 2’s launch specifically to avoid paying that bonus once the game hit its performance targets.
Did a video game CEO really use ChatGPT to plan a corporate takeover?
According to court filings reviewed by Fortune and 404 Media, Krafton CEO Changhan Kim consulted ChatGPT after being told a for-cause dismissal wouldn’t eliminate the earnout obligation without risk. The chatbot reportedly produced a multi-stage plan, internally called “Project X,” that Krafton’s leadership then largely followed.
Who won the Subnautica 2 lawsuit?
Delaware Vice Chancellor Lori Will ruled against Krafton on March 17, 2026, finding it breached the acquisition agreement. Ted Gill was ordered reinstated as CEO. The case then settled entirely on July 1, 2026, with Unknown Worlds staff receiving expanded bonus payouts.
Is the Subnautica 2 lawsuit fully resolved now?
Yes. Krafton and Unknown Worlds reached a final settlement on July 1, 2026, closing the litigation. Exact financial terms weren’t disclosed, but bonus eligibility was expanded to all Unknown Worlds staff, payable in three annual installments.
How many copies has Subnautica 2 sold?
Subnautica 2 sold 1 million copies in its first hour, 2 million within 12 hours, over 4 million within a week, and surpassed 5 million copies by mid-July 2026 – roughly two months after its May 14, 2026 early access launch.
Is Subnautica 2 available on PS5 or Switch 2?
Not currently. Subnautica 2 launched in early access on PC (Steam, Epic Games Store) and Xbox Series X|S, with day-one Game Pass support. Unknown Worlds has not announced PlayStation 5 or Nintendo Switch 2 versions.
What happened to Ted Gill after he was reinstated as CEO?
Gill was reinstated by court order in March 2026, then voluntarily agreed to step down as part of the July 1, 2026 settlement, saying new leadership was the best path forward. Krafton and Unknown Worlds are now searching for an external CEO.
Does this affect Krafton’s other games, like PUBG?
There’s no indication the dispute affected PUBG: Battlegrounds operations directly, and Krafton’s broader financial results have continued to be led by PUBG. The impact has been concentrated in Krafton’s reputation as an acquirer of independent studios, rather than in its existing live-service revenue.
