Sony acquired Naughty Dog amidst ‘ballooning budgets,’ says founder

Andy Gavin, who co-founded Naughty Dog with Jason Rubin in 1986, is a surprisingly prolific LinkedIn poster who has recently been sharing some memories about the company’s early days. This week, he posted about the state of the studio’s finances over the years, describing how much it cost to make some of Naughty Dog’s early games and how those ever-increasing figures led the studio heads to agree to a Sony acquisition in 2000.

“Our early 80s games cost less than $50,000 each to make,” Gavin wrote. “Rings of Power (‘88-91), saw budgets rise to about $100,000, but yielded slightly more than that in after tax profits in 1992. In 1993, we rolled that $100k from Rings into a self funded Way of the Warrior. But Crash Bandicoot (‘94-96) cost $1.6 million to make. By the time we got to Jak and Daxter (‘99-01), the budget busted the $15 million mark. By 2004, the cost of AAA games like Jak 3 had soared to $45-50 million — and they have been rising ever since.”

All of that led up to the Sony acquisition. As Gavin put it, “the stress of financing these ballooning budgets independently was enormous. […] 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.”

Gavin’s post has sparked some debate in the comments, including from others who work in the games industry. James Marcus, a senior artist working on Splitgate 2 for 1047 Games, responded: “It is sad that the cost have risen so much. This has created a space where far too many developers take less creative risks or sell to large corporations to avoid bankrupting after a possible failed product.”

There are, of course, potential downsides for studios getting acquired by big companies like Sony. Namely, restructuring and layoffs (Naughty Dog was also impacted by Sony’s 2024 round of cuts). For Firewalk Studios, the studio that made Concord, getting acquired by Sony in 2023 didn’t seem to do much to help the game or studio’s future at all. After all, said studio was unceremoniously shut down shortly after Concord launched. So, bit of a mixed bag when it comes to getting acquired by Sony. The ballooning costs of AAA video games, however, are an undeniable reality.