Naughty Dog Founder Cites ‘Escalating Budgets’ as Reason for Sony Acquisition

Andy Gavin, who, alongside Jason Rubin, launched Naughty Dog back in 1986, has surprisingly become quite the active presence on LinkedIn. Lately, he’s been sharing some fascinating tales from the early days of the company. Recently, he took to the platform to discuss the studio’s financial journey over the years. Notably, he detailed the escalating costs of developing Naughty Dog’s games and how this financial pressure was a key factor that nudged the company into Sony’s arms in 2000.

Gavin reminisced about the simpler times, saying, “Our early ’80s games were created with a budget of less than $50,000 each.” He shared how the budget for “Rings of Power” from ’88 to ’91 increased to around $100,000, though fortunately, it was a bit of a financial success by 1992. By 1993, they reinvested the $100,000 earned from “Rings” into self-funding “Way of the Warrior.” The stakes got higher when they developed “Crash Bandicoot” between ’94 and ’96, which demanded a whopping $1.6 million to bring to life. Fast forward to “Jak and Daxter” from ’99 to ’01, and they shattered their previous budget records, hitting over $15 million. By 2004, creating AAA games like “Jak 3” came with a jaw-dropping price tag between $45 million and $50 million—and those costs have only continued to climb since.

This all set the stage for the Sony acquisition. As Gavin candidly revealed, “The stress of independently funding these ever-expanding budgets was tremendous. The decision to sell to Sony wasn’t purely about securing financial stability for Naughty Dog. It was about equipping the studio with the resources needed to produce top-notch games without the looming threat of financial ruin with every slight misstep.”

Gavin’s post stirred up quite a conversation among industry professionals in the comments section. James Marcus, a senior artist currently working on “Splitgate 2” for 1047 Games, chimed in with, “It’s disheartening to see costs soar this high. It’s created an environment where many developers shy away from creative risks or end up selling to big corporations to avoid financial collapse after a potential flop.”

There’s no denying that merging with major companies like Sony comes with its own set of challenges. Restructuring and layoffs are common issues, as Naughty Dog experienced during Sony’s 2024 job cuts. Take Firewalk Studios, for example. After Sony acquired them in 2023, they didn’t see much benefit for the game or the studio’s future. Not too long after “Concord” was launched, the studio faced a shutdown. So, it’s a bit of a mixed bag when it comes to these acquisitions by Sony. Nonetheless, the soaring costs of developing AAA games are an unavoidable truth.