Michael Mumbauer, who took over direction of the Visual Arts Service Group in 2007, recruited a group of about 30developers, internally and from neighboring game studios, to form a new development unit within Sony. The idea was to expand upon some of the company’s most successful franchises and the team began working on a remake of the 2013 hit The Last of Us for the PlayStation 5. But Sony never fully acknowledged the team’s existence or gave them the funding and support needed to succeed in the highly competitive video game market, according to people involved. The studio never even got its own name. Instead, Sony moved ownership of the The Last of Us remake to its original creator, Naughty Dog, a Sony-owned studio behind many of the company’s best-selling games and an HBO television series in development.

Deflated, the small group’s leadership has largely disbanded, according to interviews with eight people familiar with the operation. Many, including Mumbauer, have left the company entirely. Mumbauer declined to comment and others asked not to be named discussing private information. A representative for Sony declined to comment or provide interviews.

The team’s failure highlights the complex hierarchy of video game development and in particular, Sony’s conservative approach to making games for the PlayStation 5. The Japanese conglomerate owns about a dozen studios across the world as part of its PlayStation Studios label, but in recent years it has prioritized games made by its most successful developers. Studios such as Santa Monica, California-based Naughty Dog and Amsterdam-based Guerrilla Games spend tens of millions of dollars to make games with the expectation that the investments will pay off exponentially. And they usually do. Hits including 2018’s God of War and 2020’s The Last of Us Part II are exclusive to PlayStation consoles, helping Sony sell some 114 million of the PS4. Rival Microsoft Corp. has taken the opposite approach, relying on a wide array of studios to feed its Netflix-like subscription service, Xbox Game Pass, which allows users to pay a monthly fee for unlimited access to a variety of games. 

Sony’s focus on exclusive blockbusters has come at the expense of niche teams and studios within the PlayStation organization, leading to high turnover and less choice for players. Last week, Sony reorganized a development office in Japan, resulting in mass departures of people who worked on less well-known but acclaimed games such as Gravity Rush and Everybody’s Golf. The company has informed developers that it no longer wants to produce smaller games that are only successful in Japan, Bloomberg has reported. 

This fixation on teams that churn out hits is creating unrest across Sony’s portfolio of game studios. Oregon-based Sony Bend, best known for the 2019 open-world action game Days Gone, tried unsuccessfully to pitch a sequel that year, according to people familiar with the proposal. Although the first game had been profitable, its development had been lengthy and critical reception was mixed, so a Days Gone 2 wasn’t seen as a viable option.

Instead, one team at the studio was assigned to help Naughty Dog with a multiplayer game while a second group was assigned to work on a new Uncharted game with supervision from Naughty Dog. Some staff, including top leads, were unhappy with this arrangement and left. Bend’s developers feared they might be absorbed into Naughty Dog, and the studio’s leadership asked to be taken off the Uncharted project. They got their wish last month and are now working on a new game of their own. 

Emphasizing big hits can also be counterproductive because sometimes games that start small can turn into massive successes. In 2020, Sony didn’t put much marketing muscle behind the quirky video game creation system Dreams, by the PlayStation-owned Media Molecule in the U.K. As a result, PlayStation may have missed out on its own version of Roblox, a similar video game tool. Parent company Roblox Corp. went public earlier this year and is now valued at $45 billion. 

For their first solo project, Mumbauer and his crew wanted to pitch something that would be well received by their bosses at Sony. Recognizing the risks and expense involved with developing a new game from scratch, they decided to focus on remaking older games for the new PlayStation 5. Remakes are considered a safe bet since it’s cheaper to update and polish an old game than it is to start from scratch, and they can be sold both to nostalgic old fans and curious new ones. The team originally planned on a remake of the first Uncharted game, released by Naughty Dog in 2007. That idea quickly fizzled because it would be expensive and require too much added design work. Instead, the team settled on a remake of Naughty Dog’s 2013 melancholic zombie hit, The Last of Us.

At the time, Naughty Dog was in the thick of development on the sequel, The Last of Us Part II, which would introduce higher-fidelity graphics and new gameplay features. If Mumbauer’s crew remade the first game to have a similar look and feel, the two games could be packaged together for the PlayStation 5. In theory, this would be a less expensive proposition than remaking Uncharted, since The Last of Us was more modern and wouldn’t require too many gameplay overhauls. Then, once Mumbauer’s group had established itself, it could go on to remake the first Uncharted game and other titles down the road. 

But pivoting from doing finishing work for other games to making your own is difficult, since original development teams are “competing against hundreds of other teams from all over the world, with varying levels of experiences and successes,” said Dave Lang, founder of Iron Galaxy Studios, which has served as a support team and a development studio.

“The people funding the work are often risk-averse, and if they have to pick between a team that’s done it before, and someone trying to do it on their own for the first time, I can see why some people pick the prior developer over the latter,” he said.

That’s just what Sony did. Mumbauer’s project, code-named T1X, was approved on a probationary basis, but Sony kept the team’s existence a secret, and refused to give them a budget to hire more people, leading many to wonder if the company was really committed to letting the team build a new studio. Still, the small team kept working and by the spring of 2019 they had completed a section of the game designed to showcase how the rest would look and feel.

At that time, Sony was going through a management shuffle and the new boss wasn’t impressed. Hermen Hulst, the former head of Guerrilla Games, was named head of PlayStation’s Worldwide Studios in November 2019. He thought the remake project was too expensive, according to people familiar with the matter, and asked why the planned budget for T1X was so much higher than remakes Sony had made in the past. The reason was that this one was on a brand new graphical engine for the PlayStation 5. Mumbauer needed to hire more people to help rework the graphics on new technology as well as redesign gameplay mechanics. Hulst wasn’t convinced, the people said.

Just when it hoped to enter production on the remake of The Last of Us, Mumbauer’s team got called in to help when another big game fell behind. Release of The Last of Us Part II had been pushed to 2020 from 2019 and Naughty Dog needed the Visual Arts Service Group to polish it off. Most of Mumbauer’s team, along with some of the 200 or so other staff at the Visual Arts Service Group, was assigned to support Naughty Dog, slowing down progress on its own game.

Then, the roles got reversed. Sony sent word that after the completion of The Last of Us Part II, some people from Naughty Dog would help out with T1X. Mumbauer’s team saw this as their short-lived autonomy being stripped. Dozens of Naughty Dog staff were joining the project, and some had actually worked on the original The Last of Us, giving them more weight in discussions about T1X’s direction. The game was moved under Naughty Dog’s budget, which Sony gave more leeway than the Visual Arts Service Group. Soon it was apparent that Naughty Dog was in charge, and the dynamics returned to what they had been for the last decade and a half: The Visual Arts Support Group aiding another team of developers rather than leading.

To Sony, the move made sense. Naughty Dog is “one of the key studios” for Sony’s ability to sell PlayStations, said Bloomberg Intelligence analyst Matthew Kanterman. “Sony’s competitive advantage has always been exclusive content over Microsoft and more new games as well as remakes of classic titles from such a storied team can help sustain demand for PS5.”

But those who had wanted independence were disappointed. By the end of 2020, most of the T1X team’s top staff had left, including Mumbauer and the game’s director, David Hall. Today, the T1X project remains in development at Naughty Dog with assistance from Sony’s Visual Arts Support Group. The future of the remainder of Mumbauer’s team, which has come to be jokingly referred to as Naughty Dog South, remains unclear.