Founded in 1984, Naughty Dog was an independent studio owned by Andy Gavin and Jason Rubin until 2001. The two friends, who founded the studio under the name Jam Software in September 1984 at the age of 14, are at the origin of the famous mascot Crash Bandicoot in 1996. They are also responsible for several games with modest success in the 80s and early 1990s such as Keef the Thief and Way of the Warriors.
But it is clearly from 1994, their rapprochement with Sony and the creation of Crash that the Naughty Dog studio will experience a great rise in power. So much so that the studio was bought by Sony in 2001, just before the release of Jak & Daxter, the studio's new game and new license. More than 20 years later, Andy Gavin explains this choice.
A buyout for more resources
It was directly through his LinkedIn account that Andy Gavin, the co-founder of Naughty Dog explained why the Naughty Dog studio was sold to Sony Computer Entertainment (now Sony Interactive Entertainment) in 2001. The Dogs co-founder says skyrocketing game development costs were a major reason the studio was sold. Andy points to a systemic problem in the AAA gaming space with developers “almost never having the resources to fund their own games […] gives publishers a huge amount of leverage”:
“Why did we sell Naughty Dog? It’s a question I’ve been asked countless times. The answer is simple: budgets were skyrocketing. When we started Naughty Dog in the 1980s, game development costs were manageable. We funded everything ourselves, pouring profits from one game into the next. Our games in the early 80s cost less than $50,000 each to make. Rings of Power (1988-1991) saw its budget balloon to around $100,000, but made slightly more than that in after-tax profits in 1992.
In 1993, we used the $100,000 from Rings to finance a self-funded film, Way of the Warrior. But Crash Bandicoot (1994-1996) cost $1.6 million. By the time we got to Jak and Daxter (1999-2001), the budget had topped $15 million.
By 2004, the cost of AAA games like Jak 3 had ballooned to $45-50 million, and it’s been rising ever since. But in 2000, we were still funding every project ourselves, and the stress of funding these ballooning budgets independently was enormous.
It wasn’t just us. This was (and still is) a systemic problem in the AAA space. Developers almost never have the resources to fund their own games, which gives publishers enormous negotiating power. 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 crippling fear that one misstep would ruin everything.
In hindsight, it was the right decision
Could we have kept up? Maybe. But selling – to the right person – gave Naughty Dog the stability it needed to thrive and continue creating the kind of games we always dreamed of!”
Since then, Naughty Dog has become one of the most iconic PlayStation Studios and arguably Sony’s flagship studio. With Uncharted (between 2007 and 2017) and The Last Of Us (since 2013), Naughty Dog has delivered must-have games that have left their mark on the video game industry and PlayStation history.
The studio will soon be back with Intergalactic: The Heretic Prophet, its new game and its next IP that was just announced at The Game Awards.
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