The Last of Us Online Was Naughty Dog’s Main Game for Years—Not a Side Project

As development progressed, the ambition changed the project’s nature. It was no longer simply a contained multiplayer feature that could ship alongside a narrative game. It became a live-service title that would require a continuing stream of post-launch content, updates and support.

That distinction is central to Schreier’s account. The project was reportedly not being maintained as a small side team while the rest of Naughty Dog built Intergalactic: The Heretic Prophet. Instead, the majority of the studio was focused on The Last of Us Online before its cancellation.

The reported scale: hundreds of millions, seven years and roughly 80% complete

Schreier reportedly described the project as costing “hundreds of millions” of dollars and involving the majority of Naughty Dog’s staff. Those figures help explain why its cancellation had consequences far beyond one discontinued game.

Former game director Vinit Agarwal later said that he had worked on the project for about seven years and that it was roughly 80% complete when it was cancelled in late 2023. Those figures have been reported by multiple outlets, but they should be treated as Agarwal’s account—not as an audited production estimate from Sony or Naughty Dog.

The numbers also need context. “80% complete” does not necessarily mean a game was close to launch-ready. A live-service project can have substantial playable systems while still requiring extensive testing, balancing, content production, infrastructure work and post-launch planning. The available reporting establishes the project’s reported scale, but not a complete production budget or a definitive launch schedule.

Why Naughty Dog cancelled it

Naughty Dog’s official explanation focused on the long-term burden of operating a live-service game. The studio said that releasing and supporting The Last of Us Online would require all of its resources to remain committed to post-launch content for years, severely affecting the development of future single-player games.

That left the studio with a strategic choice: become primarily a live-service developer or preserve its ability to make the single-player, narrative-driven games that define Naughty Dog’s identity. The studio chose the latter.

This was not necessarily a judgment that the game itself was poor. The stated concern was the organizational commitment required after launch. A successful live-service game is not finished when it ships; it creates a permanent production obligation. For a studio built around large, finite single-player releases, that obligation could have changed how the entire company operated.

The cancellation helps explain Naughty Dog’s long release gap

Naughty Dog’s relative quiet after The Last of Us Part II was not simply the result of one delayed single-player sequel. Reporting indicates that a large share of the studio’s resources went to The Last of Us Online, while other teams also worked on remakes, remasters and support projects.

That makes releases such as The Last of Us Part I and updated versions of earlier Naughty Dog games poor evidence that the studio had a separate, fully staffed original-game team operating normally in parallel. Earlier reporting described Naughty Dog staff moving onto The Last of Us remake work while future projects remained in pre-production.

The practical result was a long gap between wholly new releases. The project that was supposed to broaden Naughty Dog’s output instead consumed development capacity that might otherwise have accelerated new single-player work—then left the studio with years of sunk costs when it was cancelled.

What changed for Intergalactic: The Heretic Prophet

The new reporting also reverses a common assumption about Intergalactic: The Heretic Prophet. It was not, according to Schreier’s account, the project that had already received most of Naughty Dog while The Last of Us Online quietly occupied a smaller team.

The sequence was reportedly the opposite. Intergalactic did not receive the majority of the studio’s staff until The Last of Us Online was scrapped. Much of the multiplayer project’s workforce then moved onto the new single-player game, turning the cancellation into the staffing event that allowed Intergalactic to expand.

That does not erase the time and money lost on Online, but it explains why the cancellation could also accelerate Naughty Dog’s next major project. The studio was not starting from zero; it was redirecting a large existing workforce after abandoning a project that had dominated development for years.

The wider Sony live-service retreat

The Last of Us Online became an especially visible example of the risks in Sony’s broader live-service strategy. The company had pursued a large slate of recurring multiplayer games, but several projects were later delayed, cancelled or shut down.

Concord launched in August 2024 and was withdrawn less than two weeks later. Sony subsequently closed Firewalk Studios, the developer behind the game.

Sony also cancelled unannounced live-service projects at Bend Studio and Bluepoint Games. Reporting identified Bluepoint’s project as a live-service God of War title, although details about that project were not publicly confirmed by Sony. Both studios were initially reported as remaining operational after the cancellations.

The pattern did not prove that every Sony live-service game was destined to fail. Helldivers II, for example, was described by Schreier as a hit in his account of the strategy. But the cancellations and Concord’s collapse showed the limits of treating live service as a guaranteed second pillar alongside PlayStation’s single-player franchises.

The real lesson from The Last of Us Online

The most important revelation is not simply that Naughty Dog spent years on a cancelled game. It is that the project’s business model created a choice the studio could not comfortably avoid.

A small multiplayer addition evolved into a standalone live-service production. That production reportedly consumed most of Naughty Dog, cost hundreds of millions of dollars and threatened to turn the studio into a permanent support operation. Cancelling it preserved Naughty Dog’s single-player focus, but only after years of work and a substantial reallocation of resources.

For Sony, the episode illustrates why live-service development cannot be measured only by whether a project reaches release. The larger question is whether a studio can support the game indefinitely without sacrificing the creative model and pipeline that made it valuable in the first place.