The Last of Us Online was roughly 80 percent finished when Naughty Dog cancelled it in late 2023, according to the game’s director Vinit Agarwal. In a lengthy interview with the Lance E. Lee Podcast recorded in Tokyo, Agarwal described the cancellation as “soul-crushing” and revealed he only found out the project was being axed 24 hours before Sony announced it publicly.
Agarwal joined Naughty Dog back in 2014 and spent nearly seven years working on the multiplayer spinoff, from 2016 through to its cancellation in 2023. He has since left the studio and moved to Japan to found his own game development company.
A Game That Was “Very, Very Close To Done”
During the interview, Agarwal made it clear the project wasn’t some early prototype that got shelved. The Last of Us Online had reached around 80 percent completion and was, in his words, “very very close to done.” The studio had made significant progress, and the game was performing well internally.
But Naughty Dog ultimately had to choose between two projects: the multiplayer game Agarwal was directing, or the next single-player title led by studio president Neil Druckmann. That project turned out to be Intergalactic: The Heretic Prophet, which was revealed at The Game Awards 2024 as Naughty Dog’s first new franchise in over a decade.
“They had to pick the game that was kind of the bread and butter of the studio rather than this experimental game that I was working on,” Agarwal said. He added that he believed the multiplayer project “was going to be really big, but unfortunately couldn’t see the light of day.”
Sony’s Live-Service Push and the COVID Hangover
Agarwal traced the roots of the cancellation back to the broader industry shift that began during the COVID-19 pandemic. Around 2020, as people were stuck at home and turning to online games to stay connected with friends, Sony poured money into live-service development. The Last of Us Online was one of the projects that benefited from that wave of investment.
The problem was that the conditions driving that boom didn’t last. As lockdowns eased and people returned to offices, gaming spending dropped and the appetite for online multiplayer titles cooled. Sony had overcommitted, and the pullback hit hard. In 2022, the company told investors it planned to have at least 10 live-service games online by 2026. By 2023, that ambition was already unravelling, with six games delayed internally and subsidiary Bungie laying off staff.
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Bungie’s Role in the Decision
Former PlayStation executive Shuhei Yoshida shed some additional light on the cancellation last year in an interview with Sacred Symbols+. According to Yoshida, feedback from Destiny developer Bungie, which Sony had acquired, played a role in convincing Naughty Dog to walk away from the project. Bungie reportedly laid out what it actually takes to sustain a live-service game long term, and Naughty Dog realised the commitment would leave no room for Intergalactic.
“That was a lack of foresight,” Yoshida said. This lines up with earlier reports that Naughty Dog scaled back development following an internal review from Bungie, and that the studio went through a round of layoffs in October 2023 before the multiplayer project was officially put on ice.
A Deeply Personal Project
What makes the cancellation sting even more is just how personal the project was for Agarwal. He explained that the core vision for The Last of Us Online was inspired by a real-life armed robbery he experienced in Austin, Texas in 2012, where two men held him and a friend at gunpoint with shotguns over what amounted to a few dollars and a McDonald’s meal on a stolen credit card.
That feeling of desperation, of being hunted for scraps, became the foundation of the game’s design. Set in the post-apocalyptic Last of Us universe, players would scavenge for supplies in a world where other players were one of the most dangerous threats. Agarwal described playing an early build where he hid from another player in overgrown grass while they searched for him, and said the tension authentically recreated that survival instinct he felt during the robbery.
“It was such a personally meaningful project to me that it killed me that people couldn’t play it,” Agarwal said. That experience ultimately drove his decision to leave Naughty Dog and start his own studio.
Sony’s Wider Live-Service Fallout
The Last of Us Online was far from the only casualty of Sony’s live-service rethink. The years since its cancellation have been rough across the board. Sony cut 900 jobs at the start of 2024. Concord, the sci-fi shooter from Firewalk Studios, was shut down just two weeks after launch, and Sony closed both Firewalk and fellow subsidiary Neon Koi. Two more unannounced live-service titles at Bluepoint Games and Bend Studio were also scrapped, with Bluepoint itself eventually being shut down entirely.
Sony is now placing its live-service hopes largely on Marathon, the upcoming title from Bungie that carries the weight of years of expectation. Beyond Sony, the broader live-service landscape remains volatile. Warner Bros. pulled the plug on MultiVersus in early 2025, Wargaming’s Steel Hunters lasted barely three months, and titles like Highguard have been permanently shut down within weeks of launching.
What Comes Next for The Last of Us
With Naughty Dog focused on getting Intergalactic: The Heretic Prophet out the door, there’s no active Last of Us project in development that we know of. Studio president Neil Druckmann has teased that more Last of Us is coming eventually, but it has already been six years since The Last of Us Part II, nearly matching the gap between the first and second games. A potential Part III likely wouldn’t surface until sometime in the 2030s, possibly on the PlayStation 6.