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

Andy Gavin, one of the masterminds behind Naughty Dog alongside Jason Rubin back in 1986, has been quite the storyteller on LinkedIn recently, reminiscing about the early days of the company. This week, he took a trip down memory lane, painting a picture of the studio’s financial journey and how the escalating costs of their early games eventually nudged them to join forces with Sony in 2000.

“In the early 80s, our games had budgets under $50,000,” Gavin reminisced. “Then with Rings of Power between ‘88 and ‘91, those figures climbed to around $100,000, but thankfully, it did better than break even in profits by 1992. Fast forward to 1993, and we found ourselves reinvesting that $100k from Rings into self-funding Way of the Warrior. However, Crash Bandicoot from ‘94 to ‘96 saw us shelling out $1.6 million. By the time Jak and Daxter rolled around in ‘99 to ‘01, we were dealing with a whopping $15 million budget. Come 2004, crafting AAA titles like Jak 3 pushed the costs to between $45 to $50 million—and the trend has only continued upwards.”

Gavin explained that these rising expenses were a significant push towards their decision to join Sony. “Handling these exploding budgets on our own was incredibly stressful,” he admitted. “Selling to Sony was about securing Naughty Dog’s future, allowing us to continue crafting top-tier games without the looming threat of financial collapse.”

His reflections stirred quite a buzz in the comments, attracting input from fellow industry professionals. James Marcus, a senior artist at 1047 Games working on Splitgate 2, lamented, “It’s disheartening how much costs have surged. It puts developers in a tricky spot, either shying away from creative risks or choosing to sell to bigger entities to avoid financial disaster from a potential flop.”

Of course, being acquired by giants like Sony isn’t all sunshine and rainbows. It can lead to restructuring and layoffs—Naughty Dog itself felt this with Sony’s round of cuts in 2024. For instance, Firewalk Studios, creators of Concord, faced a similar fate in 2023. Their acquisition didn’t quite pan out as hoped since the studio was shuttered soon after the game’s launch. So, it’s a gamble with mixed results when it comes to joining forces with someone like Sony. Yet, the ballooning costs of AAA games remain an inescapable reality.