Andy Gavin, known for co-founding Naughty Dog with Jason Rubin back in 1986, has become quite a voice on LinkedIn, where he often reminisces about the early days of the famed gaming studio. Recently, he opened up about the financial ups and downs Naughty Dog faced over the years, offering insights into the cost of creating some of their initial games and how those escalating expenses eventually led to the decision to join forces with Sony in 2000.
Gavin shared, “Back in the early ’80s, producing our games cost less than $50,000 each.” He reminisced how the budget for “Rings of Power” between 1988 and 1991 climbed to around $100,000. Despite this increase, the game still managed to yield slightly more than that in profits post-tax by 1992. The following year saw them reinvest that $100K into the self-financed “Way of the Warrior.” But as the timeline moved to “Crash Bandicoot” from 1994 to 1996, production costs skyrocketed to $1.6 million. Fast forwarding to the development of “Jak and Daxter” from 1999 to 2001, the budget soared past $15 million. By 2004, the expenses for AAA games like “Jak 3” had reached a staggering $45-50 million — a trend that continues upward to this day.
This financial pressure paved the way for Sony’s acquisition. As Gavin explained, “The burden of independently covering these growing budgets was immense. Selling to Sony wasn’t simply about securing Naughty Dog’s financial continuity. It allowed the studio the leeway to focus on crafting top-tier games without the looming threat of budget-induced calamity.”
Gavin’s post has stirred up discussions in the comment section, attracting input from peers in the gaming realm. James Marcus, a senior artist involved in the development of Splitgate 2 at 1047 Games, remarked, “It’s unfortunate to see such a rise in costs. It’s driven numerous developers to either curb creative risks or sell out to big companies, just to avoid the financial disaster of a failed product.”
Though acquisitions can provide stability, they come with potential drawbacks, especially when large entities like Sony are involved. These challenges could include restructuring and job cuts — a reality Naughty Dog was not exempt from during Sony’s 2024 layoffs. For Firewalk Studios, the creators of Concord, being acquired by Sony in 2023 didn’t translate into a brighter future. The studio faced closure shortly after launching Concord, highlighting that such acquisitions can be a mixed blessing. Nonetheless, the relentless rise in AAA game development costs is an indisputable fact of the industry.
