Gaming Giant Naughty Dog Hit by Layoffs: Contract Developers Affected Amid Industry-Wide Turmoil

The video game industry is currently grappling with a significant wave of layoffs, and even contract developers at Naughty Dog, the PlayStation first-party studio renowned for titles like Uncharted 4: A Thief's End and The Last of Us Part II, have found themselves impacted. Inside sources have disclosed to Kotaku that Naughty Dog has initiated the premature termination of contracts for numerous workers.

The news of layoffs circulated within the Santa Monica, California-based studio last week, as confirmed by two sources with knowledge of the situation. Various departments, ranging from art to production, were affected, with the majority of those affected belonging to the quality assurance testing division. The sources revealed that at least 25 developers were affected by these downsizing efforts, but it seems that full-time staff members were not part of the cuts. As of July, Naughty Dog's headcount exceeded 400.

According to sources, no severance packages are being offered to the affected individuals, and both those who have been laid off and those who remain employed are allegedly being pressured to keep the news confidential. Their contracts will not officially terminate until the end of October, and they will be expected to continue working through the remainder of the month. At the time of reporting, Sony had not responded to a request for comment.

These layoffs come amid challenges faced by a multiplayer spin-off of The Last Of Us, based on the Factions mode from the original game, despite the successful HBO adaptation. In June, Bloomberg reported that Sony had redirected resources away from the project following an unfavorable internal review by Bungie, the live-service game developer recently acquired by the company. An inside source has now suggested to Kotaku that while the multiplayer game is not entirely canceled, it is effectively on hold.

Additionally, these layoffs follow the retirement announcement of Evan Wells, co-president of the studio, who is set to leave Naughty Dog at the end of 2023 after 19 years with the company. Neil Druckmann, the creative director and lead co-writer of Naughty Dog's recent Uncharted and The Last of Us titles, as well as a contributor to the HBO show, had previously revealed a restructuring of the studio's leadership.

Naughty Dog is not the only major first-party studio facing layoffs this year. 343 Industries, the Xbox studio responsible for the Halo franchise, was significantly affected by mass layoffs at Microsoft in January. Other prominent gaming companies, including Electronic Arts, Ubisoft, Epic Games and Embracer, have also announced layoffs in recent weeks and months, leaving many developers increasingly concerned about the ongoing stream of negative news within the industry.

In April, Sony had announced its ambitious plan to sell a record-breaking 25 million PS5 consoles in the current fiscal year.