Acquired by Sony in 2001 for an undisclosed sum, Naughty Dog is today considered the crown jewel among PlayStation's first-party studio family (although Insomniac has certainly been putting in work of late). In a LinkedIn post (thanks, Eurogamer), co-founder Andrew Gavin reflected on the circumstances that led to the consequential acquisition, which shows that the more things change, the more they stay the same.
Citing the spiralling cost of game development in the late 1990s and early 2000s, Gavin said one of the principal reasons Naught Dog sold to Sony was due to a "systemic issue in the AAA space." Developers "almost never have the resources to fund their games... [giving] publishers enormous leverage."
Gavin explains that back in the day, in the late 80s and early 90s, the average video game cost a quaint $50,000 to $100,000 to develop, but this dramatically began to escalate. Crash Bandicoot was released in '96 and cost $1.6 million to make. Jak and Daxter, released in 2001, cost over $15 million. By Jak 3 (2004), the cost of making a AAA game was already around $50 million per project, and costs have never stopped increasing.
"Back in 2000, we were still self-funding every project, and the stress of financing these ballooning budgets independently was enormous... It was about giving the studio the resources to keep making the best games possible without being crushed by the weight of skyrocketing costs and the paralysing fear that one slip would ruin it all", Gavin said.
Today, the Naughty Dog co-founder says a big-budget game will "easily" run you "$300, $400, $500 million... Looking back, it was the right call."