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."
Is the video game industry headed for another collapse, or has one already begun? What's the solution to these ballooning costs? Will someone please think of the shareholders? Let us know what you think in the comments section below.
[source linkedin.com, via eurogamer.net]
Comments 49
Makes you wonder where they would be today if Sony never acquired them.
@Bentleyma Either bought by someone else like Activision or straight up not existing anymore. Going to Sony was the best move as it got us Uncharted and TLoU.
Imagine if Hugh Hefner bought Naughty Dog thinking it was something completely different instead. ND would’ve had fifteen brilliant and well-developed women protagonists with some lovely “features”. Oh man, Mr. Hefner you let me down big time there 😭😭😭
The next release by Naughty Dog is going to be their most important in their history. If it sells fantastically well and garners huge critical acclaim, the studio will definitely be regarded as one of Sonys best once again. However, if things go awry, this will definitely be a defining moment for Naughty Dog for altogether different reasons. The big budget costs of games is definitely heading in the direction of unsustainable and with Sonys finances nowhere near competitors, they really can’t afford to have failures. Naughty Dog have sunk a probable huge sum of money into the Factions 2 title with zero return and now with Intergalactic costing a probable huge sum, it will really be interesting to see how things progress after its launch (whenever that may be). I can see Sony Japan taking far more control of their studios going forward if things go wrong, as some of them have a very large element of control as to what they pursue. If the studios end up costing Sony more than they gain, then sustainability will become a far larger matter to address and given that the games sector is a big part of Sonys earnings, they can’t afford to run risks.
@Bionic-Spencer Agree with this.
Just playing through TLOU2 - Remastered for the first time right now and I'm really loving it. They have taken real narrative risks which I'm enjoying. The gameplay is just complex enough to keep it tight and interesting.
I assume they will use the same kind of gameplay loop in a new universe. I'm cool with that. Just so long they don't go the way of Assassin's Creed and lose their way like that franchise has
you dont need to spend £300 million on a game for it to be good.
development costs have gone mad
I guess that explains why the latest protagonist is wearing branded trainers while piloting a branded space ship. Curious on the financial agreement there and how much it will help fund the project.
-"Is the video game industry headed for another collapse, or has one already begun?" When exactly was the last one? Also if there is growing money every year a market can't be under the collapsed category. If anything it's in an adjustment phase, the problem is the adjustment will take years because companies won't just cancel everything big they have in production and people are going to keep losing their jobs in the mean time.
"What's the solution to these ballooning costs?" People stop complaining when games aren't gigantic or don't look ultra good or aren't build from 0 for every entry. Yes there are happy people playing Like a Dragon annual games with models made 10 years ago but oh boy I remember people complaining because the boat in GOW R had a recycled animation from GOW, also how to forget the term "one and done" or the fact that Ronin looks "like a ps4 game" lol.
One of the things I liked the most from the Intergalactic trailer was the fact that the robot looked great and also not unnecessarily expensive.
BTW maybe Intergalactic can take the championship back but right now Insomniac is the best PS Studio. They not only make good games they also make the most money and are an oiled machine that delivers new games with a median of 1.5 years between releases. If they can release anything this year that will mean not even a pandemic and a Ryan service can stop them.
Nice article. 👍👍
I almost want the crash to happen. The amount of trash games is high nowadays.
Oh, the collapse is coming for sure. But still. It costs THAT much to develop games these days and yet they’re released in half finished states? Where does the money go?!
Once my favourite studio but not so much nowadays.
@Darth_Stofi ye I don't get how some are even allowed 🤣 I'm on Xbox but guess it's same on all consoles etc scrolling through there's the normal games but there seems a tonne of games that look like mobile games or not even real games n stuff like that outbreak all over place 😭😭😭
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If that’s the cost of development, and it keeps going up, then so too will the cost of each game.
Then factor in cost of console development.
PS6 - £800 - £1000?
Gaming becoming very expensive for average Joe, with numerous reports of games ‘underselling’
Maybe M$ have a good idea about a phased move away from console space like Sega before them
For people who said they want gaming industry to colapse again, i don't know why the fvck you wish for something so awful. But be careful what you wish for.
So as the tech gets better each gen so does the development costs, also compared to back then no one was using motion cap and a lot of games weren't fully voiced as they are now. For games to reach that target of realism of course the dev costs are going to increase, especially when it also takes devs longer to make games and costs more to market their games as there's more ways to market a game than there was 20-30 years ago.
@GymratAmarillo The last video game industry crash was in 1983.
@DennisReynolds TLOU and Uncharted 4 were ttere last great games too.
@RudeHero Games used to be made by geeky gamers, now they're made by political activists.
@trev666 here's the thing. Indie games can look like 80s/90s games and sell well. Everything else needs to look amazing, or they're dismissed as ps3 games. So, unless you're Nintendo or an indie developer, a huge budget is a must in this day and age.
@Reform What a nonsense people cant handle anything anymore especially gamers. Its a girl woke if its not a model for woke, gay, skin color people are just little crybabies.
Never thought that this time people are less accepting towards other then in the Middle East of the fifties.
Games are getting bigger and bigger, need to look fantastic its just not doable.
@PSme That wont make gaming less expensive with graphic cards that start a €500.
@Flaming_Kaiser very true.
What I said still holds true - gaming is becoming too expensive for the average person, regardless of graphics card prices.
They will decide cards are way too expensive, then look at consoles and see they getting expensive as well with games rising( digital only has got everyone in a strangle hold) and decide ‘ you know what? I think I’m going get a different hobby.’
Don’t believe me? A massive PlayStation install base is still on PS4 and this is the first gen of consoles that have not had any price drops but have actually gone up in price.
@GymratAmarillo Is the video game industry headed for another collapse, or has one already begun?"
When exactly was the last one?
The 80s.
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@breakneck
Interesting, I wasn't aware, I haven't played those games. Thanks.
Also you have Sports games that make money from in game advertising on billboards such as Fifa, which has been doing that since 1994.
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Buying them was a good move for both Sony and ND, back in a time when Sony made mostly good decisions.
Letting people like Amy Hennig and Bruce Straley go was a bad move, in a time when Sony makes a lot of bad decisions.
@Perturbator out of interest, what are the lots of bad decisions Sony has made that has lead them to leave MS, their main rival, in the dust across two generations? I'd argue they continue to make a majority of good decisions
@PSme I totally agree with you its not fun anymore. Living, food, electricity i atleast have a backlog that will keep me busy for several years if i decide that.
back when the games industry was ran by nerds & not corporate suits = 👌
@riceNpea No that's mostly from Microsofts even worse decisions, and the brand recognition and player game catalogue (lots of games owned on the platform will make players stay) Playstation earned in the past.
As for bad decisions; hardly any new must-have 1st party games this gen, failed live service strategy (12 games and 9 are now dead?), Bungie acquisition, Concord, Factions nothingburger, failed PSVR2 strategy... I gotta run, but you get the picture.
@Bionic-Spencer I can understand what you are saying but video games are a CREATIVE medium. Not every project works out and money is frequently 'wasted' in the pursuit of something great. This is normal. Development isn't a straight line.
What Sony WILL care about is the final bottom line and in the quarter Concord launched they made record profits. Not every game or studio has to succeed for Sony to do exceedingly well. But what has made many of their games and studios succeed is a fairly hands off approach and leaving the creatives to do their job making art.
Of course that doesn't mean budgets are unlimited, or there is no oversight, you have producers and other roles for that,. But Sony, like Nintendo, have been very understanding about the creative process and realising timelines and budgets need to be fluid to keep working on the game until it is ready. Though other times you have to just cut development short and take the loss, like Factions, Concord or "Darkside/Internal-7" (The Santa Monica Studio Sci-Fi game that was cancelled after 3 years before God of War 2018). This is normal.
@Perturbator I understand why you say what you say, but don't agree, we'll, apart from MS messing things up but that's mostly because Sony got things so right MS felt they needed to come up with a new, totally dumb strategy.
Think of the shareholders!!! 😭
@Flaming_Kaiser yes 👍🏻 I have already made the decision to call this my last gen.
Like you, I too have enough backlog/old games to keep me happy during the wet UK winters.
Come summertime (HA! Uk summer? I can wish!) I will cycling a lot more.
@breakneck a small percentage of indie games can make money. The ones we keep hearing about.
But my point is that while indie games can look like something straight out of the 90s and be successful, the same doesn't apply to AAA games. Unless an AAA game has a huge budget, it's destined to fail. Hence AA games no longer being made.
Crash bandicoot 1.6 million to make was well worth it.crash bandicoot is one of the best video games ever made.word up son
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@PuppetMaster I’m not exactly hoping for another collapse by any means. It’s just that it seems more likely lately. Studios being bought up and closed, half finished games being released, tons of layoffs lately…
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@breakneck. Crash bandicoot and syphon filter is my 2 favorite ps1 games ever.word up son
The current Game of the Year winner should be enough to tell the video games industry that you don't need to spend hundreds of millions of dollars to make a game worthy of winning the Top Prize.
Going with Sony back then was the right call, continue to stick around with Sony of today though not so sure. Remember Sony doesn't know how to make games back then so they will take in any dev that wanted the money just so long as they commit for the long term. Naughty Dog was lucky they bite the right hook and got reel in and was made Sony's golden goose. The silver goose end up being Insomniac and the rest is history.
£500 Million for a game is not a sustainable business model.
@GamingFan4Lyf but how much has it sold compared to games with a bigger budged? More importantly, one game is not enough to draw general conclusions.
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