Naughty Dog was founded in 1984 and developed games that players found both endearing and memorable before it was wholly acquired by Sony in 2001. The company’s co-founder Andrew Gavin recently shared a post on LinkedIn explaining the reason why they sold the studio.
Naughty Dog co-founder Andrew Gavin posing with Crash Bandicoot mascot
“Why did we sell Naughty Dog?” Gavin wrote. “It’s a question I’ve been asked countless times. The answer is simple: budgets were skyrocketing. When we started Naughty Dog in the 1980s, game development expenses were manageable. We bootstrapped everything, pouring profits from one game into the next.”
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Gavin explained that the studio made classic games in the 80s with a budget of less than $50,000. However, by the turn of the next decade, the cost of making games had skyrocketed and it became harder for them to self-fund their productions. Gavin listed the games they have made over the years alongside how much they spent on each of them.
- Rings of Power (1988 – 1991) – $100,000
- Way of the Warrior (1993) – $100,000
- Crash Bandicoot (1994 – 1996) – $1.6 million
- Jak and Daxter (1999 – 2001) – $15 million
- Jak 3 (2004) – $45-50 million
According to Gavin, Rings of Power yielded only slightly above the $100,000 they invested in the game after tax profits. Rolling back the capital into the next game meant they were likely running on fumes during the year-long production process.
Gavin explained they were still self-funding up until 2000, notwithstanding the ballooning production costs—and that came with enormous financial stress. By 2004, the cost of making triple-A games had skyrocketed to $45-50 million—and continues to rise.
Was it possible for Naughty Dog founders to cope with the rising production cost?
Today, the production and marketing budget of a triple-A game ranges between $200 and $500 million which is a huge risk for anyone self-financing their project. Our recent compilation of the five most disappointing games of 2024 shows they cumulatively lost over $1 billion in production costs. Only large publishers can bear risks of that magnitude, especially if the game’s reception falls below anticipation.
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“It wasn’t just us. This was (and still is) a systemic issue in the AAA space,” Gavin wrote. “Developers almost never have the resources to fund their own games, which gives publishers enormous leverage.”
“Selling to Sony wasn’t just about securing a financial future for Naughty Dog. It was about giving the studio the resources to keep making the best games possible, without being crushed by the weight of skyrocketing costs and the paralyzing fear that one slip would ruin it all.”
While Gavin thinks there is a chance they would have kept up with the rising production cost, he believes that selling the studio to the right party “gave Naughty Dog the stability it needed to thrive and to continue making the kinds of games we’d always dreamed of!”
We can only imagine how much Sony must have sunk into Naughty Dog’s next original IP, Intergalactic: The Heretic Prophet. The game was announced at The Game Awards 2024 event and is already a hot topic across social media platforms.
Do you think it is still possible for indie developers to self-finance triple-A games that will match the size and quality of let’s say The Last of Us? Share your thoughts in the comment box below.
