Sony Purchased Naughty Dog Due to ‘Escalating Costs,’ Founder Reveals

Andy Gavin, the visionary who co-founded Naughty Dog with Jason Rubin back in 1986, has surprisingly been quite active on LinkedIn, sharing fascinating recollections about the early days of the company. In a recent post, he shed some light on the financial journey of the studio, discussing how the escalating costs of developing some of Naughty Dog’s initial projects eventually led to their decision to partner with Sony in 2000.

Gavin reminisced about the budget of their early 80s games, noting that each cost under $50,000 to produce. When they worked on “Rings of Power” between 1988 and 1991, the budget climbed to around $100,000, but they were fortunate enough to see a little more than that in after-tax profits by 1992. Armed with the $100k from “Rings of Power,” they invested it into the self-funded venture “Way of the Warrior” in 1993. However, by the time they developed “Crash Bandicoot” between 1994 and 1996, the costs shot up to $1.6 million. Fast forward to the development of “Jak and Daxter” from 1999 to 2001, and the budget exceeded a staggering $15 million. By 2004, the expense of creating AAA titles like “Jak 3” surged to an astounding $45-50 million—and these figures have only continued to rise since then.

This financial pressure pushed them toward the Sony acquisition. As Gavin explained, the burden of independently financing these ever-expanding budgets was immense. Selling to Sony was not just about ensuring financial stability for Naughty Dog; it was about equipping the studio with the necessary resources to continue producing top-quality games, without being overwhelmed by mounting costs and the daunting prospect that a single misstep could spell disaster.

Gavin’s post has sparked a lively discussion among industry peers in the comments section. James Marcus, a senior artist involved with “Splitgate 2″ at 1047 Games, chimed in with his thoughts: “It’s a shame that costs have escalated this much. It has led to a scenario where too many developers either shy away from creative risks or choose to sell to large corporations to mitigate the risk of potential failure.”

Of course, joining forces with a massive company like Sony can come with its own set of challenges. Restructuring and layoffs are always a possibility—Naughty Dog wasn’t immune to Sony’s round of cuts in 2024. For Firewalk Studios, which was responsible for “Concord,” the acquisition by Sony in 2023 didn’t seem to do much to foster the game or studio’s future, as it was unceremoniously shut down not long after Concord’s release. So, being acquired by a giant like Sony is somewhat of a double-edged sword. Nevertheless, the skyrocketing costs of AAA game development remain an unavoidable fact in the industry today.