Andy Gavin, co-founder of Naughty Dog with Jason Rubin in 1986, is a surprisingly prolific LinkedIn user who has recently been sharing some memories about the company's early days. This week, he posted about the state of the studio's finances over the years, describing how much it cost to make some of Naughty Dog's first games and how those rising numbers led studio bosses to agree to a Sony acquisition in 2000.
“Our early 80s games cost less than $50,000 each to make,” Gavin wrote. “Rings of power ('88-91), budgets increased to about $100,000, but in 1992 they produced a little more than that in after-tax profits. In 1993, we took out that $100,000 from Rings in a self-financed company way of the warrior. But crash bandicoot ('94-96) cost 1.6 million dollars. By the time we get to Jak and Daxter ('99-01), the budget surpassed the $15 million mark. In 2004, the cost of AAA games like jak 3 had skyrocketed to $45-$50 million, and they have continued to rise since then.”
All of this led to the acquisition of Sony. As Gavin said, “the stress of funding these growing budgets independently was enormous. […] Selling to Sony wasn't just about securing a financial future for Naughty Dog. “It was about giving the studio the resources to continue making the best games possible, without being crushed by the weight of skyrocketing costs and the paralyzing fear that one slip-up would ruin everything.”
Gavin's post has sparked some debate in the comments, including others who work in the games industry. James Marcus, a senior artist working at Split door 2 for 1047 Games, responded: “It's sad that the cost has increased so much. This has created a space where too many developers take less creative risks or sell to large corporations to avoid bankruptcy after a potential product failure.”
Of course, there are potential downsides to studios being acquired by big companies like Sony. Namely, restructurings and layoffs (Naughty Dog was also hit by Sony's 2024 round of cuts). For Firewalk Studios, the studio that made Concordbeing acquired by Sony in 2023 didn't seem to help the game or the studio's future much. After all, said studio was unceremoniously shut down shortly thereafter. Concord launched. So, there's a bit of a mix when it comes to being acquired by Sony. However, the rising costs of AAA video games are an undeniable reality.