The Last of Us Online Was No Side Project: How Naughty Dog’s Cancelled Multiplayer Game Consumed the Studio

The cancellation of The Last of Us Online was not the quiet abandonment of a side experiment. Jason Schreier’s reporting portrays Naughty Dog’s multiplayer project as a major production that grew from a smaller addition to The Last of Us into an ambitious live-service game occupying most of the studio. The project had reportedly been in development for about four years with a team numbering in the hundreds, and later reporting placed its cost in the hundreds of millions of dollars.

The reason Naughty Dog ultimately stopped work was the burden that would have followed launch. Sony and Naughty Dog concluded that maintaining the game for years would require so many people and resources that it would severely affect the studio’s ability to create other games.

From Factions follow-up to standalone live service

The project was initially associated with the multiplayer component known as Factions, but its scope expanded substantially. By the time Schreier discussed it, The Last of Us Online was reportedly being treated as a significant standalone release rather than a small multiplayer feature running alongside Naughty Dog’s main work. Schreier said the game had been in development for roughly four years with hundreds of developers involved.

That scale mattered because live-service games do not end at launch. They typically require ongoing content, technical support and a team capable of maintaining the player base over an extended period. Naughty Dog’s own explanation was that sustaining the project would have diverted resources from its other titles and could have pushed the studio toward becoming primarily a live-service developer.

How complete was The Last of Us Online?

Former game director Vinit Agarwal later said the game was approximately 80% complete when Naughty Dog cancelled it in late 2023.

That number should be treated as a retrospective estimate, not an official Sony production milestone. It also does not necessarily mean the project was 80% ready for release: a live-service game can be playable while still requiring substantial work on infrastructure, content, testing and the systems needed for years of post-launch support.

The figure nevertheless illustrates the scale of the decision. Naughty Dog did not cancel the project at the concept stage. It reportedly abandoned a production that had consumed years of work and had advanced deep into development.

Why Sony and Naughty Dog cancelled it

The core issue was opportunity cost. In a December 2023 blog post, Naughty Dog said that continuing the game would require the studio to put nearly all of its resources behind post-launch support. That would have “severely impacted” its ability to make other games.

For a studio best known for tightly authored, single-player games, the choice was strategic as much as financial. Running The Last of Us Online indefinitely would have meant preserving a large permanent team for one service while reducing the staff available for new narrative projects. Schreier’s reporting therefore frames the cancellation as an attempt to protect Naughty Dog’s long-term identity and production capacity, not simply as a response to a troubled build.

The reported cost made the decision more consequential. One report characterized the project as costing Sony “hundreds of millions” of dollars, although Sony has not publicly disclosed a final budget.

The effect on Naughty Dog’s release schedule

The multiplayer project helps explain why Naughty Dog went so long without shipping a wholly new game after The Last of Us Part II in 2020. During that period, the studio released remakes and remasters, but a majority of its development staff had reportedly been focused on The Last of Us Online.

That does not mean every Naughty Dog employee worked exclusively on the multiplayer game, or that the project alone explains the studio’s entire release schedule. It does show why the cancellation created such a large gap: years of first-party development capacity had been committed to a game that never reached players.

What happened to the team afterward?

After The Last of Us Online was scrapped, much of the staff working on Intergalactic: The Heretic Prophet reportedly joined that project. The reports dispute the idea that Intergalactic had simply been a fully staffed parallel production waiting for the multiplayer game to finish; instead, its team was substantially built out after the cancellation.

Intergalactic is Naughty Dog’s announced new franchise and is led by co-president Neil Druckmann. Reports have put its target release in 2027, but that schedule is not a publicly locked Sony release date.

Separate reports have also pointed to other unannounced Naughty Dog projects. Their identities, scope and release plans remain insufficiently confirmed, so they should not be treated as announced games.

A warning sign for Sony’s live-service strategy

The cancellation became one of the clearest examples of the risks in Sony’s push to expand beyond its traditional single-player releases. Concord launched in August 2024 and was taken offline in September after a brief commercial run.

In January 2025, Sony also cancelled two unannounced live-service projects at Bend Studio and Bluepoint Games. The important distinction is that Sony cancelled the games, not the studios: reporting at the time said both teams would remain operational while Sony worked with them on future projects.

Taken together, these cases show the tension in the live-service model. A successful game can generate recurring revenue, but an unsuccessful or cancelled project can consume years of work before launch. For Naughty Dog, The Last of Us Online became a particularly visible example because the project absorbed much of a prestige single-player studio and was cancelled only after reaching an advanced stage.

The larger lesson

The story of The Last of Us Online is ultimately about the cost of strategic misalignment. A smaller multiplayer idea expanded into a large, expensive live-service undertaking. By the time Naughty Dog assessed the demands of operating it indefinitely, the project had become difficult to reconcile with the studio’s single-player ambitions.

The cancellation protected resources for future games, but it also left a multi-year hole in Naughty Dog’s release schedule and reportedly cost Sony hundreds of millions of dollars. The project’s legacy is therefore not only the game that players never received; it is also a case study in how live-service ambitions can reshape—and delay—the work of a studio built around finite, story-driven releases.