Although Neil Druckmann claimed he'd been tinkering with Intergalactic: The Heretic Prophet since The Last of Us Part II dropped in 2020, Naughty Dog only truly focused on developing this game after the cancellation of The Last of Us Online in 2023. That detail comes from Bloomberg journalist Jason Schreier, who argues the common story—"multiplayer was a small side project while the main team moved on to Druckmann’s next big single-player"—is backwards.
"A lot of folks assume The Last of Us Online was some sort of side thing and that most devs immediately pivoted to Intergalactic: The Heretic Prophet after Part II. Not true. The studio’s concentration on Intergalactic only began in earnest after The Last of Us Online was canned. Resources were then funneled into a new single-player project," Schreier wrote.
After Part II shipped, the studio split its attention: part of the crew handled remakes and updated editions of older games, while others pushed The Last of Us Online forward. There was an attempt to revisit Uncharted, though that pivot led to The Last of Us Part I for PlayStation 5 instead, and much of the remaining team kept working on the online project.
"That is why, after the release of The Last of Us Part II in 2020, the studio didn’t present a single completely new project."
Originally the online effort grew out of a multiplayer mode intended for Part II. It began modestly, then—thanks to COVID-era decisions at Sony—was ambitiously repurposed as a live service, a gamble to go big (i.e., a long-term revenue engine). Years and serious cash went into that bet, yet it never reached players.
The studio later said launching it properly would have meant shifting nearly all staff to continuous content production, effectively turning Naughty Dog into a studio focused on service ops - a direction they didn’t want, per their account. They also leaned on service veterans from Bungie (which joined Sony in 2022) for perspective. When the online project closed, the people freed up were able to concentrate on Intergalactic: The Heretic Prophet for PS5 - a reshuffle that, for better or worse, set the current course.