Krafton’s AI-First Pivot Amid Subnautica 2 Turmoil

The publisher behind PUBG, Subnautica, and Hi-Fi Rush is trying to reinvent itself yet again. Krafton has announced that it is becoming an “AI-first” company, committing tens of millions of dollars to artificial intelligence infrastructure and tools that it says will shape the future of its game development and internal operations. The move lands in the middle of mounting controversy: a high-profile legal battle related to Subnautica 2, community concern over generative AI in creative jobs, and questions about whether aggressive automation is compatible with the realities of game production.

This article unpacks what Krafton’s AI strategy actually involves, how it intersects with the ongoing Subnautica 2 drama, and what it might signal for the broader games industry as AI becomes a core part of publishers’ long-term plans.

From Battle Royale Giant to AI Evangelist

Krafton’s public profile has largely been defined by the runaway success of PUBG: Battlegrounds, which helped popularize the modern battle royale boom. Riding on that success, the company has acquired and partnered with multiple studios, including Unknown Worlds of Subnautica fame, and gotten involved with projects like The Callisto Protocol and Hi-Fi Rush publishing rights in certain regions.

However, the landscape has shifted. PUBG’s dominance is no longer guaranteed in a crowded genre, several expensive bets have underperformed, and competitive pressures in Korea and globally are intensifying. In this context, Krafton’s leadership has framed AI as a lever for renewed growth and efficiency.

According to coverage from industry press, Krafton is reorganizing its internal structure so that AI sits at the center of problem solving and management, rather than being treated as a peripheral R&D experiment.^1,2 The company has gone so far as to label itself an “AI-first” organization in statements to local media, signaling that AI use will not be limited to individual tools but baked into its processes, governance, and long-term strategy.

The Money: How Much Krafton Is Spending on AI

Krafton’s AI turn isn’t just rhetorical. It is underpinned by a sizable capital investment aimed at building proprietary infrastructure rather than relying solely on third-party cloud services.

This mirrors a broader trend across tech and gaming. Major firms have been racing to secure access to GPUs and related infrastructure, as demand for large-scale AI workloads has surged. Reports from companies like Nvidia and market analyses from organizations such as OECD and McKinsey note that AI infrastructure and capabilities are becoming a strategic differentiator, especially where latency, data privacy, and proprietary models matter.^3,4 Krafton’s in-house cluster is likely aimed at similar advantages: more control over costs, custom models tuned for game-related tasks, and independence from purely external providers.

What “AI-First” Means Inside Krafton

Beyond the headline spending, the company’s messaging indicates several pillars to its AI-first transformation:

• AI-centered management system – Automating routine coordination, scheduling, and reporting, so human staff can (in theory) focus on creative and complex work.
• Agentic AI for multi-step tasks – Systems designed not just to generate content, but to carry out structured sequences like project tracking, dependency management, or iterative design assistance.
• Company-wide training and incentives – Budget reserved for teaching staff to use AI tools effectively and integrating them into daily workflows.
• HR and organizational restructuring – Human resources and org charts are slated to be reorganized around AI-enabled roles and responsibilities.

The emphasis on “agentic AI” is particularly notable. The term describes systems that can plan, reason, and act across multiple steps rather than respond to single prompts. Research from AI labs and academic groups has highlighted how agentic frameworks can handle complex workflows—such as long-horizon planning or automated experimentation—but also raise new risks around oversight and unintended behaviors.⁵ For a game publisher, these systems could be applied to everything from production scheduling to in-game live operations and player behavior analysis.

Likely Application Areas Inside the Company

Although Krafton has not publicly detailed every concrete use case, the structure of its plan suggests several practical applications:

• Production Management: AI could track sprint progress, flag resource conflicts, generate reports, and help prioritize backlogs across multiple studios.
• Quality Assurance: Automated testing agents could run through common gameplay loops, detect crashes, and surface regression issues faster.
• Player Analytics: Models might detect churn risk, segment players, or optimize in-game events based on behavioral data.
• Localization and Tools: Machine translation and AI-assisted editing could shorten localization cycles, with human editors refining the output.
• In-game AI and NPCs: The company has hinted at “in-game AI” work, potentially involving more dynamic characters, procedural missions, or adaptive difficulty systems.

What remains controversial is whether this AI push also covers generative content for art, dialogue, or audio—areas that have been at the center of intense debate between publishers and creative workers.

Subnautica 2, Lawsuits, and an AI-Fueled Backlash

Krafton’s AI strategy would be a big story on its own, but it arrives while the company is embroiled in a very public dispute with Unknown Worlds, the studio behind Subnautica and Subnautica: Below Zero.

Reporting from CourtHouse News details a legal battle in which Unknown Worlds’ founders accused Krafton of undermining their ability to hit an earnout target related to Subnautica 2, allegedly using ChatGPT-generated plans to justify certain decisions.⁶ A Delaware judge ruled against Krafton in March 2026, characterizing its justifications for firing key executives as pretextual and ordering one founder reinstated as CEO, with extended time for the studio to achieve its payout conditions.

That case struck a nerve beyond contract law because of how AI was implicated. The idea that a parent company might consult a general-purpose AI chatbot to shape strategy for a major studio—and then deploy the results in a way the court viewed as self-serving—has sharpened public skepticism about AI’s role in high-stakes corporate decisions, especially when people’s jobs and livelihoods are involved.

Developers Distance Themselves from Generative AI

Following Krafton’s AI-first announcement, some players worried that Subnautica 2 would be heavily reliant on generative AI for art, writing, or design. In response, Unknown Worlds developers publicly clarified that they were not using generative AI to create the game, emphasizing that their AI work referred to traditional systems like creature behavior trees rather than text or art generators.⁴ This aligns with a broader position among many studios that want to maintain trust with their players and staff amid a turbulent conversation around AI and creative work.

The contrast is stark: Krafton pitching AI as the core of its future, while a flagship studio associated with one of its biggest franchises explicitly disavows generative AI for its most anticipated sequel.

Why Game Publishers Are Betting on AI

Even with the backlash, major game publishers are pursuing AI for understandable reasons:

• Cost pressure and risk: AAA games often require hundreds of staff, multi-year development cycles, and soaring budgets. Any perceived opportunity to automate parts of production is attractive.
• Live service complexity: Always-online games with constant events, patches, and content drops can benefit from AI assistance in analytics, scheduling, and tuning.
• Global reach: Faster localization, customer support triage, and market analysis can help companies respond quickly to regional trends.

Studies from organizations like the OECD and research initiatives funded by the European Commission have noted that AI is likely to transform creative and cultural sectors, including games, both by augmenting human work and by automating certain tasks entirely.^3,5 For leadership teams under investor pressure, these transformations can look less like optional experiments and more like necessary modernization.

The Risks: Trust, Talent, and Regulatory Scrutiny

Despite the potential benefits, Krafton’s situation highlights several risks associated with an aggressive AI-first posture.

Erosion of Trust with Developers

When AI is invoked in management decisions—especially those that lead to layoffs, restructuring, or cancelled projects—it can deepen distrust between publishers and their teams. In the Subnautica 2 case, AI wasn’t simply a coding assistant; it became part of the narrative around an attempted corporate power play. That sets a troubling precedent.

Skilled developers may become wary of organizations that frame AI primarily as a means to “optimize” labor, rather than as a tool to empower creative work. Over time, this could make recruitment and retention harder for companies perceived as using AI to justify cost-cutting.

Regulatory and Legal Exposure

AI usage in corporate decision-making is drawing increasing attention from regulators worldwide. The EU AI Act, for example, introduces obligations for higher-risk AI systems and emphasizes transparency, traceability, and human oversight.⁷ While game production tools may not fall in the highest-risk categories, AI used in HR, management, or contract-sensitive decisions could attract scrutiny if it leads to discrimination or unfair practices.

The court finding in the Subnautica dispute, where AI-generated strategies were cited as part of a failed attempt to avoid payout obligations, shows that judges are willing to examine how AI is used at the boardroom level. Companies will need strong documentation and governance structures to demonstrate that AI-assisted decisions remain accountable and lawful.

Community Pushback Around Generative AI

Players, modders, and fan artists have increasingly voiced concern that generative AI can devalue human creativity, exploit training data without consent, and weaken the uniqueness of games’ visual and narrative identity. When a publisher champions AI without clear guardrails, communities often fear:

• Lower-quality, more generic content flooding games.
• Fewer opportunities for human artists, writers, and performers.
• Ethical issues with training data derived from existing creative works.

This is part of why studios like Unknown Worlds are keen to publicly distance core game content from generative AI, even while their parent publisher leans into AI as a strategic pillar.

How Krafton Could Use AI Responsibly

The tension around Krafton’s AI pivot does not mean AI has no place in game development. Rather, it underscores the need for clear boundaries and transparency. Responsible AI adoption in this context might include:

• Human-first creative decisions: Ensuring AI does not replace lead roles in art direction, narrative design, or audio, but serves as a tool under direct human control.
• Consent-respecting training data: Favoring datasets and tools whose provenance is clear, with licensing or permissions that respect creators’ rights.
• Transparent communication: Letting players and staff know where AI is used (e.g., in testing, analytics, or localization) and where it is not (e.g., replacing writers outright).
• Governance frameworks: Internal policies that spell out how AI can be used in HR, project prioritization, and legal strategy, with explicit human accountability.

If Krafton wants to be seen as a role model for the future of game development, as its leadership has claimed, it will need to demonstrate tangible commitments in these areas, not just sweeping rhetoric about efficiency and innovation.

What This Means for Players and the Industry

For players following the Subnautica 2 drama and Krafton’s broader trajectory, several takeaways are emerging:

• AI is becoming core infrastructure for major publishers, not a side experiment.
• Legal and ethical questions around AI are no longer hypothetical; courts are already weighing how companies deploy AI in real disputes.
• Studios may assert independence from publisher-level AI strategies, especially around generative content that could erode their identity or reputation.
• Player pressure matters; clear community concern can push developers to publicly state their limits on AI usage.

In the coming years, stories like Krafton’s AI-first pivot are likely to become more common. The details of how each company handles governance, communication, and collaboration with developers will determine whether AI in games is seen as an empowering creative force or a tool of corporate overreach.

Frequently Asked Questions

Is Krafton using generative AI to build Subnautica 2?

No. Developers at Unknown Worlds have publicly stated that they are not using generative AI to create Subnautica 2. Their references to “AI systems” relate to traditional game AI, such as behavior trees for creatures, rather than model-generated art or dialogue.⁴

What does Krafton mean by “AI-first”?

“AI-first” in Krafton’s usage refers to reorganizing the company so AI is embedded into core management, infrastructure, and development workflows. This includes investments in a large GPU cluster, restructuring HR and organizational systems around AI usage, and allocating dedicated budgets for training employees on AI tools.

How much is Krafton investing in AI?

Krafton has announced plans to invest about KRW 100 billion (roughly USD 70 million) to build a GPU cluster for AI workloads, plus around KRW 30 billion (over USD 20 million) annually starting in 2026 to promote AI adoption and training inside the company.^1,2

Why is the Subnautica 2 situation so controversial?

The controversy stems from a legal dispute in which Krafton was found by a Delaware court to have acted improperly when removing key executives at Unknown Worlds. Court documents indicated that the company consulted ChatGPT in planning some of its strategy, which has fueled public concern about the role of AI in sensitive corporate decisions and attempts to avoid contractual earnout obligations.⁶

Will Krafton’s AI push affect other games like PUBG?

While Krafton has not detailed specific AI features planned for PUBG or other titles, its AI-first strategy suggests that analytics, live operations, and internal production tools for these games will increasingly rely on AI-powered infrastructure. Whether that translates into visible in-game changes or mostly back-end optimizations will depend on how individual game teams choose to apply the new capabilities.