The Last of Us Online Cancelled - Live Service Abandoned by AAA

The Last of Us Online Cancelled - Live Service Abandoned by AAA

The Last of Us Online is cancelled, but the press release announcing that signals a shift in AAA thinking - they know audiences are on board with an anti live service message, and they're willing to exploit it.

Conor Caulfield

Live Service Games are in trouble, and now we can prove it - as Sony’s crown jewel developer Naughty Dog cancel their live service title before it enters it’s tenth year of development, and explicitly frame it as a choice between making great single player games, or churning out a live service title.

This is an admission we’ve not seen to date from a developer this well known and powerful, and it could mean there’s a genuine sea change happening in publisher and developer thinking.

This is not just prominent first party developers for the biggest player in the console space rejecting live service - but doing so publicly, loudly and instead actively choosing single player games.

Naughty Dog have illuminated a path - now the rest of the industry can follow.

  • The Last of Us Online is cancelled.
  • This has been reportedly on the way for a while, with the team talking about the game still being in development in May.
    • Then reporting from Bloomberg suggested it was in trouble with the team being downsized after a milestone review - and the overall project direction was re-evaluated.
    • Then an October report from Kotaku suggested that the game was now “on ice”, as they laid off around 25 developers in contracted positions.
  • Now, as 2023 crawls to an end, Naughty Dog have finally admitted that the game simply won’t be coming out, nearly seven months after those first reports.
  • What’s particularly notable about this though isn’t just that the game is cancelled, or that Naughty Dog is walking away from the Live Service commitment that every Sony Studio is seemingly adhering to.
  • It’s that we haven’t learned this from a Sony Financial Statement or as part of some announcement of The Last of Us 3.
    • Both of those would usually be the PR play to help cushion the blow of bad news.
    • Instead this time, Naughty Dog have thrown the whole concept of Live Service games down to take the fall.
  • They think the public perception on Live Service games development has shifted to the point where they can happily scapegoat that genre in favour of making more single player games.


We realize many of you have been anticipating news around the project that we’ve been calling The Last of Us Online. There’s no easy way to say this: We’ve made the incredibly difficult decision to stop development on that game.

We know this news will be tough for many, especially our dedicated The Last of Us Factions community, who have been following our multiplayer ambitions ardently. We’re equally crushed at the studio as we were looking forward to putting it in your hands. We wanted to share with you some background of how we came to this decision.

The multiplayer team has been in pre-production with this game since we were working on The Last of Us Part II – crafting an experience we felt was unique and had tremendous potential. As the multiplayer team iterated on their concept for The Last of Us Online during this time, their vision crystalized, the gameplay got more refined and satisfying, and we were enthusiastic about the direction in which we were headed.

In ramping up to full production, the massive scope of our ambition became clear. To release and support The Last of Us Online we’d have to put all our studio resources behind supporting post launch content for years to come, severely impacting development on future single-player games. So, we had two paths in front of us: become a solely live service games studio or continue to focus on single-player narrative games that have defined Naughty Dog’s heritage.

We are immensely proud of everyone at the studio that touched this project. The learnings and investments in technology from this game will carry into how we develop our projects and will be invaluable in the direction we are headed as a studio. We have more than one ambitious, brand new single player game that we're working on here at Naughty Dog, and we cannot wait to share more about what comes next when we’re ready.

So there are two things we can take away from this statement.

  1. Live Service Demand scope means that there is no middle ground - it’s all or nothing in terms of development.
  2. Naughty Dog are now willing to tell audiences that as a press beat because they know that it will be taken well.

The Scope of Live Service Demand

  • A reminder that when Naughty Dog developed TLOU2, 2000+ people worked on the game, including outsourcing teams across 14 studios who handled specialist elements like VO or Sound Design.
    • In Kotaku’s October reporting, they suggested that Naughty Dog’s internal headcount was around 400 (pre layoffs).
There is no way that Naughty Dog did not know how much work a live service Multiplayer game would be.
  • Even assuming that this whole Live Service idea was an imposition from Sony (who remember, recently halved the number of live service games they expect to have out by FY25 from 12 to 6) - there’s no way that the team at Naughty Dog didn’t know how much work it would take to build and then run a full live service.
  • You need way more than 400 people when the game is at the AAA scale.
  • Based on the statement, we can probably see that the Multiplayer team who built the Last of Us Factions for the first title were working on this during production of TLOU2.
    • That was a game that started development in 2014. It’s nearly 10 years later when it’s been cancelled.
    • A reasonable assumption is that the team at Naughty Dog were working on Online as a follow-up to Factions during that time. Potentially, that was then spun into a standalone product, one that would handily suit the live service goal that Sony had broadly set across all it’s teams.
  • In that instance, the shift would be from a minor side mode of an actually quite well liked multiplayer suite of features, to a full live service game.
    • It’s incredibly disappointing that you can’t just make an interesting multiplayer side mode for your massive AAA title like you could for 2013.
    • But this was likely the direction they took.
  • The expectation for the latter would be seasonal content, full fledged map and gameplay updates on a regular basis - with a constant stream of monetizable cosmetics or other purchase opportunities.
  • This is what Naughty Dog mean when they say they would be building post support for years after.
    • So that’s 9 Years of development on a project that they’re presenting as just now being unsustainable for long term production.
    • Something about that maths doesn’t add up.
  • As developer Brandon Sheffield suggests - this is likely Naughty Dog as a studio effectively covering for the bad decisions of someone further up who couldn’t track a production cost graph on a spreadsheet.
    • Because otherwise this is half a dozen points of failure compounding.
  • So when developers are looking at this press release, running the numbers and trying to work out how it was ever feasible to spend 9 years working on a multiplayer project that never had post launch support properly scoped, what’s the point of it?
  • Well - because this press release isn’t about telling audiences that Naughty Dog has cancelled their Live Service Game.
  • It’s about telling audiences that Naughty Dog has cancelled their live service game in favour of making single player games.
    • And that’s the big takeaway here.
    • The appropriate audience management play has been judged by this Sony First Party to be saying - “we aren’t making live service because we want to make single player games”
  • That is a monumental shift.

The Perception of Live Service has Shifted

  • The importance of the way this is framed is key:
So, we had two paths in front of us: become a solely live service games studio or continue to focus on single-player narrative games that have defined Naughty Dog’s heritage.
  • Look at the wording.
    • “a solely live service games studio”
  • vs
    • “single-player narrative games that have defined Naughty Dog’s heritage”
  • This is not neutral language that would appear in a Sony Financial Report announcing the cancellation.
  • Live service is framed in terms of being just another games studio, while making Single Player narrative games is what Naughty Dog does.
    • This is them retaining their identity, calling on fans to remember what they love about Naughty Dog games.
  • And then the kicker, because don’t worry - they’re already working on the next iteration of the games you love, revealing more games in development than the one already discussed.
We have more than one ambitious, brand new single player game that we're working on here at Naughty Dog
  • There are obviously going to be people disappointed about this move - it’s worth noting that Naughty Dog’s Twitter account limited replies immediately.
  • Lots of people have been following along with this because they genuinely do like Naughty Dog’s combat and traversal mechanics in The Last of Us and were hoping for a Factions follow up.
  • Those people are reasonably going to be frustrated with the news that the online game is cancelled - and that they were excited about something that now won’t happen.
    • Naughty Dog clearly knew this!
    • That’s why this release starts with a framing of how hard the decision was and how disappointed they are.
  • But the decision was still taken to frame the release around how this was a choice between Single Player and Live Service games.
    • Naughty Dog believe they’ll get better press this way.
  • They’re not wrong!
  • This is genuinely good news - another studio saved from the meat grinder of endless skins and desperately hoping to displace Fortnite but with a tenth of the resources and staff.
  • We think that - and the regular audience of this channel likely does too.
    • The minority of highly engaged audiences who’ll come and seek out this type of coverage probably already have strong feelings on there being too many live service titles without an audience leading to developers closing.
  • What this press release shows though is that Naughty Dog believes that sentiment is now widespread enough that they can use it with the mass market.
  • This is the kind of press release that gets reported by the likes of the BBC, with Naughty Dog's anti live service, pro single player framing front and center.
The Last of Us Online cancelled by developer Naughty Dog
An online game based on the PlayStation hit is officially halted by developer Naughty Dog.
  • Millions will see it! Audiences and developers alike - and that's the real takeaway from all of this.
  • It's true, there won’t be a Last of Us Online.
  • What this press release hopefully does is give other developers the ammunition to turn to publishers and management and say:
    • “Naughty Dog couldn’t do live service - and audiences respected them for it. So why are we forcing something we’re not good at?”
  • With that in mind - maybe we’ll get to see more of these types of cancellations before games come out, rather than as a studio shutters because their live service gambit failed.