How Rising Costs Pushed Naughty Dog into Sony's Arms

Naughty Dog co-founder Andrew Gavin recently explained on LinkedIn why the well-known gaming studio was acquired by Sony in 2001.

Gavin said rising development costs are the main factor. He noted that game developers rarely have enough funds to fund their projects, which means they have to rely on large publishers, which gives publishers immense power.

"People always ask me why we sold Naughty Dog to Sony. To be honest, it's simple -- the budget is getting bigger," Gavin said. He worked in the studio for nearly 20 years and left in 2004.

"When we started making games in the 1980s, the cost was still very low. The profit we could make from reinvestment came from funding. Our early game production cost less than $50,000. By the early 1990s, games like Ring of Thrones had risen to $100,000, but we were still able to stay independent."

Gavin shares how things change quickly. In 1993, they used the profits of "Ring of Power" to develop "The Road of Warriors", but the costs then surged. Crash Wolf was $1.6 million in the mid-1990s, and by the time Jack and Dust were produced around 2000, the budget had climbed to more than $15 million.

By 2004, the cost of making a big game like Jack 3 was between $45 million and $50 million. “Costs have been rising,” Gavin explained. "In 2000, we still raised all the money ourselves. The pressure is huge. We have to sell to survive. Joining Sony allows us to continue making great games steadily without worrying that a mistake will ruin everything."

Looking back, he thought selling the studio to Sony was the right decision. He also added that it is more expensive to make AAA games nowadays, with some games having a budget of up to $300 million to $500 million.

"Can we stick with it on our own? Maybe. But selling to Sony gives us support for growth and allows us to create games we have always wanted to create."

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