When Naughty Dog shut down The Last of Us Online in December 2023, it shocked the industry and devastated the team that had spent seven years building it. But according to a veteran game publisher executive, canceling the project was actually sound strategy. The mistake, she argues, happened long before the shutdown.
Laura Fryer, a founding member of Xbox and former general manager at WB Games Seattle, laid out her analysis in a recent video. While she sympathized with the developers who watched their work get shelved, she framed the cancellation itself as difficult but necessary leadership.
The real problem, Fryer contended, was greenlighting a live service game without understanding what it would actually demand. "Live service games are not a mystery," she said. "There's plenty of data out there that they could have looked at to understand what it would take to do this type of game."
Naughty Dog faced a hard choice: commit enormous resources to perpetual post-launch support for The Last of Us Online, or preserve capacity to develop single-player narrative games. The studio chose the latter, pivoting back to what it does best and freeing up resources for Intergalactic: The Heretic Prophet, the next project from studio president Neil Druckmann.
Game director Vinit Agarwal acknowledged the bind in recent comments. He described the decision as choosing between his multiplayer experiment and the studio's core identity. "They had to pick the game that was kind of the soul, bread and butter of the studio, rather than this experimental game that I was working on," he said.
Fryer's criticism focused on the planning phase, not the exit. She outlined the demands of live service development: new maps, modes, weapons, seasonal content, balance patches. "It's an infinite treadmill," she noted. Studios need to calculate whether their team size can sustain that workload indefinitely while maintaining other projects.
Sony apparently didn't do that math upfront. According to former PlayStation executive Shuhei Yoshida, it took input from Bungie, the Sony-owned studio behind Destiny, to finally convince Naughty Dog that the numbers didn't work. Bungie's analysis of player retention and resource requirements became the reality check that shifted the decision.
"The ambition was there, but the realistic upfront planning wasn't," Fryer said. She praised Naughty Dog's leadership for recognizing the problem before it metastasized into studio-wide burnout and mediocrity.
That acknowledgment doesn't erase the pain for the team. Seven years of work, millions of dollars in investment, and the personal toll on developers adds up. But Fryer argued the industry should reframe how it judges the decision. "The pain for the team is real and I feel for them," she said. "But pulling the plug, that was not the real mistake. The real mistake was in greenlighting this experiment in the first place without doing the homework upfront."
The broader lesson cuts across the industry. Publishers have chased live service revenue for years, often without rigorous upfront analysis of whether their existing infrastructure could support it. Fryer's take suggests that more studios might benefit from similar hard looks at their actual capacity before committing seven-year development cycles to uncertain projects.
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