CEO Steals Company with ChatGPT - Subnautica 2 Lawsuit Explained by a Lawyer

Why It Matters

The dispute illustrates how earn‑out clauses can trigger aggressive takeover tactics, exposing acquirers to significant legal liability and reshaping risk assessments in gaming‑industry M&A.

Key Takeaways

• Crafton acquired Unknown Worlds for $500M plus $250M earnout.
• CEO Changhan Kim feared earnout would damage studio’s book value.
• Crafton used ChatGPT, formed Project X, seized Steam publishing rights.
• Board resolution to block Subnautica 2 launch proved ineffective legally.
• Court restored access; litigation may hold Crafton liable for lost revenue.

Summary

The video dissects the fallout from Crafton’s 2021 acquisition of Unknown Worlds Entertainment, the studio behind Subnautica, which included a $500 million upfront payment and an earn‑out clause worth up to $250 million through the end of 2025. CEO Changhan Kim quickly grew alarmed that meeting the earn‑out could erode the studio’s book value, prompting internal warnings that the deal was a “bad deal.”

In response, Crafton allegedly turned to ChatGPT, created an internal “Project X” task force, and seized control of the Steam account that published Unknown Worlds’ titles. The move locked the studio out of its own publishing platform, led to termination letters for three key employees, and was justified by a purported plan to prevent a premature Subnautica 2 launch. Board resolutions aimed at blocking the launch were later deemed ineffective, and a Delaware court ordered the immediate return of Steam access.

The video highlights internal communications where Kim described the earn‑out as a liability, the use of AI to devise a takeover strategy, and the court’s reminder that “a contract is not a suggestion.” It also notes that Ted Gil, the studio’s head, regained his position and can now decide when Subnautica 2 ships.

The episode underscores the legal and financial risks of earn‑out structures, especially when acquirers attempt to sidestep obligations. Pending litigation could hold Crafton accountable for revenue lost during its control, setting a precedent for future publisher‑developer deals and reinforcing the enforceability of contractual earn‑out provisions.

Original Description

When the CEO of Krafton realized they would owe almost $250 Million to the creators of Subnautica 2, he panicked and sought advice on breaching the deal from none other than ChatGPT.