Sony’s Acquisition of Naughty Dog Driven by ‘Rising Costs,’ Founder Reveals

Andy Gavin, who, along with Jason Rubin, founded Naughty Dog back in 1986, has been quite active on LinkedIn lately, sharing some intriguing insights into the early days of the company. Recently, he’s been reminiscing about the studio’s finances and how the rising costs of game development eventually led them to sell to Sony in 2000.

In one of his posts, Gavin noted, “Our early games from the 80s were created on a budget of less than $50,000 each. But by the time we tackled Rings of Power from ’88 to ’91, the costs had escalated to about $100,000. Thankfully, this investment paid off, and we saw profits above that in 1992. We took our earnings from Rings and plunged $100k into a self-funded project, Way of the Warrior, in 1993. However, when we developed Crash Bandicoot between ’94 and ’96, the costs skyrocketed to $1.6 million. Fast forward to Jak and Daxter from ’99 to ’01, and we found ourselves with a budget of over $15 million. By 2004, AAA titles like Jak 3 were costing between $45 and $50 million, a trend that has continued to climb.”

All these financial pressures paved the way for the Sony acquisition. As Gavin explained, the decision to sell wasn’t purely financial. “Financing these ballooning budgets on our own was enormously stressful. Selling to Sony wasn’t just about securing a stable future financially. It was also about equipping Naughty Dog with the means to keep crafting top-tier games without being overwhelmed by soaring costs or paralyzed by fear of a costly misstep,” Gavin remarked.

Gavin’s reflections stirred up quite a discussion in the comments, attracting views from others in the gaming world. James Marcus, a senior artist at 1047 Games working on Splitgate 2, commented, “It’s disheartening to see how much costs have surged. It has created an environment where developers either shy away from creative risks or opt to sell to major corporations to avoid the financial risk of a potential flop.”

Acquiring studios like Naughty Dog can have its downsides, often involving restructuring and job cuts. Naughty Dog itself wasn’t immune to Sony’s round of layoffs in 2024. For example, Firewalk Studios, known for creating Concord, didn’t seem to benefit much from its acquisition by Sony in 2023. The studio was unexpectedly closed not long after the game was launched. So, joining forces with big names like Sony can be a double-edged sword. However, the increasing costs of AAA game production remain a fact that studios must contend with.