Sony Acquired Naughty Dog Due to ‘Escalating Costs,’ Claims Founder

Andy Gavin, who alongside Jason Rubin set up Naughty Dog in 1986, has been quite the active voice on LinkedIn recently, sharing glimpses from the early days of their company. This week, he delved into the studio’s financial journey, shedding light on the escalating costs of developing their early games. This surge in expenses eventually led to the decision to join forces with Sony back in 2000.

Gavin noted, “Back in the 80s, our games were made for less than $50,000 each.” Moving into the late ’80s, with “Rings of Power” (’88-’91), the budget climbed to roughly $100,000, but it did bring in a little more than that post-tax by 1992. In 1993, that $100k profit was funneled into creating “Way of the Warrior” on their own dime. However, “Crash Bandicoot” (’94-’96) was a different beast entirely, with its production running up to $1.6 million. Fast forward to “Jak and Daxter” (’99-’01), where the budget hit the $15 million mark. By 2004, the price tag for AAA titles like “Jak 3” had leaped to $45-50 million, and the costs have only gone up since then.

These skyrocketing expenses set the stage for the Sony acquisition. Gavin reflected on the situation, explaining that the financial strain of independently managing such large budgets was immense. “Selling to Sony wasn’t just about securing our financial future,” he said. “It was about having the backing to continue creating top-tier games without the looming threat of financial collapse from escalating costs.”

Gavin’s insights stirred up quite a bit of discussion among the LinkedIn community, particularly from industry peers. James Marcus, a senior artist working on “Splitgate 2” for 1047 Games, chimed in with his thoughts: “It’s unfortunate that costs have surged so dramatically. This scenario has led many developers to shy away from creative risks or sell to bigger corporations to avoid the financial crash from a potential unsuccessful product.”

There are, of course, concerns that come with being scooped up by a giant like Sony. Concerns like restructuring and job losses—issues Naughty Dog also faced during Sony’s 2024 cost-cutting round. Consider Firewalk Studios, creators of “Concord,” whose Sony acquisition in 2023 seemed not to benefit the studio or game’s long-term prospects much at all, as the studio was closed soon after “Concord” hit the shelves. It’s a mixed bag, navigating acquisitions by a behemoth like Sony. Yet, the ever-rising costs of producing AAA games remain a hard pill to swallow, one that developers must increasingly reckon with.