How Rising Costs Pushed Naughty Dog into Sony’s Arms
Image Credit: Naughty Dog
"It was the right move in the end."
Naughty Dog’s co-founder, Andrew Gavin, has shared why the well-known game studio was sold to Sony back in 2001.
In a post on LinkedIn, Gavin said that rising development costs were a major factor. He explained that game developers rarely have enough money to fund their own projects, which means they have to rely on big publishers. This puts a lot of power in the hands of those publishers.
"People ask me all the time why we sold Naughty Dog. Honestly, it’s simple—budgets were getting too big," Gavin said. He worked at the studio for nearly 20 years before leaving in 2004.
"When we first started making games in the 1980s, things were affordable. We could fund everything ourselves by reinvesting what we earned. Our early games cost under $50,000 to make. By the early '90s, our budget for a game like Rings of Power went up to $100,000, but we were still able to stay independent."
Gavin shared how things changed fast. In 1993, they used the profits from Rings of Power to self-fund Way of the Warrior, but then costs exploded. Developing Crash Bandicoot in the mid-’90s cost $1.6 million, and by the time they made Jak and Daxter around 2000, the budget had climbed to over $15 million.
By 2004, making a big game like Jak 3 cost between $45-50 million. "And costs just kept rising," Gavin explained. "In 2000, we were still funding everything ourselves. The pressure was massive. We had to sell to survive. Joining Sony gave us the stability to keep making great games without the constant fear that one mistake could destroy everything."
Looking back, he believes selling the studio to Sony was the right decision. He added that making AAA games today is even more expensive, with some budgets reaching $300 to $500 million.
"Could we have kept up on our own? Maybe. But selling to Sony gave us the support we needed to grow and create the games we always wanted to make."
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