Andy Gavin, who started Naughty Dog with Jason Rubin back in 1986, has been quite active on LinkedIn lately, sharing some fascinating insights about the company’s formative years. Just this week, he delved into the studio’s financial evolution over the years, shedding light on how the mounting costs of their early game projects eventually led to their decision to sell to Sony in 2000.
Gavin reminisced, “In the 80s, our games were made on a shoestring budget of under $50,000 each. By the time we developed Rings of Power between ’88 and ’91, our expenses had doubled to around $100,000, though we did manage to pull in a modest profit by 1992. Rolling our success from Rings into another venture, we self-funded Way of the Warrior in 1993. But fast forward a few years to Crash Bandicoot, which set us back a staggering $1.6 million. Jak and Daxter, developed from ’99 to ’01, skyrocketed to a $15 million budget, and by 2004, creating a AAA title like Jak 3 meant coughing up $45-50 million. Costs have only kept climbing since.”
These escalating expenses inevitably drove Naughty Dog toward Sony. Gavin explained that “The financial pressure of funding these ever-growing budgets solo was overwhelming. Selling to Sony wasn’t just a move to secure our financial future; it meant equipping the studio with resources to keep producing outstanding games, without the looming threat of financial meltdown after a single misstep.”
Gavin’s reflections have sparked quite a conversation in the community, drawing comments from industry peers like James Marcus, a senior artist on Splitgate 2 at 1047 Games. He chimed in with, “It’s disheartening to see costs rise so sharply. This trend forces developers to play it safe creatively or sell to big corporations to dodge bankruptcy following a potential flop.”
However, being acquired by giants like Sony isn’t without its pitfalls. Restructuring and layoffs are common — even Naughty Dog faced cuts from Sony’s 2024 layoffs. Take Firewalk Studios, for example, creators of Concord. Their acquisition by Sony in 2023 didn’t seem to provide much stability. The studio was shut down soon after Concord’s release. It’s clear that such acquisitions can be a mixed blessing. Nonetheless, the rapidly increasing costs of AAA games remain an undeniable reality in the industry.
