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

Andy Gavin, who along with Jason Rubin founded Naughty Dog back in 1986, has been quite active on LinkedIn lately, sharing some fascinating insights into the studio’s humble beginnings. A recent post took a deep dive into the studio’s financial journey, shedding light on the escalating costs of creating some of Naughty Dog’s classic games and how these soaring budgets nudged them toward a sale to Sony in 2000.

“Our early projects in the ’80s cost less than $50,000 each to develop,” Gavin reminisced. “With Rings of Power (’88-’91), our budgets crept up to around $100,000, but thankfully, we saw slightly higher post-tax profits by 1992. By 1993, we reinvested that $100k from Rings into a self-funded Way of the Warrior. But then Crash Bandicoot (’94-’96) came along, with a staggering $1.6 million price tag. Jak and Daxter (’99-’01) pushed our spending further, hitting the $15 million mark. Fast forward to 2004, and the cost for AAA titles like Jak 3 had climbed to $45-50 million—and they’ve only gone up since.”

These challenging financial realities led directly to Sony stepping in. As Gavin explained, “The strain of independently funding these ballooning budgets was immense. Selling to Sony was not just about ensuring Naughty Dog’s financial stability. It also meant we could continue crafting top-tier games without the overshadowing anxiety of crippling costs or the fear that one misstep could spell disaster.”

Gavin’s post has certainly stirred up conversation and even sparked responses from within the industry. One notable insight came from James Marcus, a senior artist on Splitgate 2 for 1047 Games, who commented, “It’s unfortunate how the costs have skyrocketed. This pressures developers to avoid creative risks or to sell to big corporations, just to avoid bankruptcy if a project fails.”

Acquisitions by industry giants like Sony can have mixed outcomes for studios. Restructuring and layoffs can often follow, as was the case for Naughty Dog during Sony’s 2024 workforce reductions. Similarly, Firewalk Studios faced challenges after being bought by Sony in 2023; despite their work on Concord, the studio was abruptly shut down post-launch. So while being acquired by Sony can bring resources, it’s not always a guaranteed path to success. Regardless, the ever-increasing expenses involved in developing AAA games remain a stark reality.