Article: Losing Rare, and How Nintendo Lost Western Developers

I have started on a PC Platformers Game Opinion Summaries list, but that will take a little while before it gets started.  Today, though, I’ve got this!  This article was based on posts I made in this NeoGAF thread here, but significantly reworked and expanded on.


Nintendo once had home consoles that were very popular with third party developers.  Those times are now long past, of course; now things seem to nearly have hit bottom, as Nintendo home consoles get almost no third-party games, and handhelds get fewer than they used to thanks to the rise of smartphones.  Indie download-only titles excepted, modern Nintendo consoles have fewer games for them than older ones did, and even worse software droughts.  And making things worse here in the West, over the course of the ’00s, Nintendo separated from most of their first, second, and close third party Western partners.  In Japan the 3DS at least still gets some game support, and that helps, but it’s not enough.  But how did things get to where they are?

First, I must start with the Nintendo 64.  In Japan, the N64 was something of a disaster.  Sales were only a small fraction of the SNES (Super Famicom), and most third-party developers abandoned Nintendo for Sony and, in some cases, Sega as well.  However, here in the US, the N64 was successful and sold nearly as well as the SNES had here.  Developers noticed this and its impressive-for-the-time power, and as a result the N64 has a fairly good library of American-developed games.  At that point the best American game developers made computer games, but some of the better console teams supported the N64.  While Nintendo’s primary audience was younger, they did very good outreach to teen and older gamers: the N64 was the console of choice for the first-person shooter fan who wanted to play on consoles, had the best wrestling games, and had some very good sports and racing games as well.  Nintendo also built up a team of Western first, second, and third-party studios from the mid ’90s to early ’00s, starting with Rare and the N64 “Dream Team” in 1994 and going from there.  For more on Nintendo’s great Western offerings on the N64, read my Nintendo 64 Game Opinion Summaries list; I will not get into that here.  This article is about the Gamecube and Wii generations.

These are the major studios Nintendo partnered with in this period.

Rare: Second party. Rare is a British studio, but they were discovered by great Nintendo of America exec Howard Lincoln, and had their greatest sales success here.  The most important purchase Nintendo made that decade, Rare bought an about 50% share in Rare in 1994, changing that developer from a multiplatform studio to a Nintendo-exclusive one.  Working with Nintendo, Rare responded and made their best game yet, the all-time classic Donkey Kong Country.  With its success, Rare instantly became one of the most prominent developers around.

Left Field: Second party.  This smaller American studio mostly focused on basketball games on the N64 and Gamecube (yes, despite their baseball-inspired name), but they did also make one fantastic racing game in Excitebike 64.

Nintendo Software Technology, or NST: First party.  NST is a small-ish studio with initially young staff, mostly from a game-development school I believe.  The studio started out making some Game Boy Color and N64 versions of popular games such as Ridge Racer and Bionic Commando, and continued making both handheld and console games through the GC generation, mostly focusing on racing games on consoles and various things on handhelds.

Silicon Knights: Second party.  Run by the controversial Dennis Dyack, Silicon Knights may be unpopular now, but they did make one of my favorite games while working with Nintendo, Eternal Darkness.  The studio didn’t release any N64 games, but their two GC games did help the system.

Retro Studios: First party.  This studio was started up by Howard Lincoln in the late ’90s, and was initially run by some ex-Acclaim people.  After early difficulties, they eventually made the exceptional Metroid Prime for the Gamecube and its sequels.

Factor 5: Third party.  Though Factor 5 was a third party, they worked closely with Nintendo, particularly on system audio, and made a sound program to aid Game Boy Color sound programming.  Factor 5 was always a tech-focused company, and released some of the most technically impressive games on the N64 and Gamecube.

Iwata’s New Direction

However, around the turn of the millenium Howard Lincoln and his boss Minoru Arakawa both retired from Nintendo of America.  Lincoln was a strong leader, and without him the developer network he built up started to slowly crumble.  And around that same time, a new boss took over in Japan, as Satoru Iwata replaced the longtime Nintendo head Hiroshi Yamauchi.  I’m sorry to be critical to someone who sadly died young, but while Iwata did many great things for Nintendo and I love a lot of his work, particularly Nintendo’s first-party Japanese efforts and some of the partnership titles, there is some legitimate criticism I need to make.  Iwata wanted to reverse Nintendo’s 5th-gen failure in Japan, and take more direct control over Nintendo’s overseas subsidiaries as well.  He did rebuild Japanese relationships, though the Gamecube ended up selling worse than the Nintendo 64 there, so sales did not recover; the PlayStation 2 proved to be unstoppable.

Meanwhile, he allowed Western relationships, the ones which had maintained the Nintendo 64 and led it to success here, founder.  Taking direct control over Nintendo of America also probably did more harm than good, as since the early ’00s NoA no longer had the independence to make deals such as the Rare purchase.  Reggie may be a good marketing guy, but he does not have Lincoln’s authority.  Nintendo needed both Western and Japanese developers, and a more independent branch in the region where Nintendo sees the most sales, America, made sense.  Iwata’s Nintendo needed to put a lot more money into Western development teams, along with the important work he did to rebuild relationships with Japanese third parties, but the first place to look would be to the pretty good teams Nintendo was already working with.  Rare is the most prominent of those, but those others on the list above are noteworthy as well.  However, Nintendo really needed both American AND Japanese partnerships, not one at the cost of the other.  They have never accomplished this, unfortunately.

The end result of this was that of all of the studios on the list above, only only two, the two first-party studios, still work for Nintendo, and only one, Retro, is still as important as they once were, as NST’s console team was shut down early in the Wii generation.  And even Retro was reduced in size, as in the early days the studio worked on multiple games at once, instead of only one.  Of the rest Factor 5, Silicon Knights, and Left Field have closed, and Rare is a shell of its former self.  And nobody on their level has replaced them, either; Nintendo has partnered with Next Level Games and Monster Games for a few titles, but that’s about it. Satoru Iwata focused instead on rebuilding Nintendo’s relationships with Square-Enix, Bandai Namco, Capcom, and other major Japanese studios.  Iwata thought that that kind of partnership with Japanese third parties was preferable to Howard Lincoln’s system of wholly and partly-owned Western developers, but Nintendo needed some of both, not one or the other. Paying a third party to make a game for you isn’t a bad idea, but it won’t necessarily lead to lots of support outside of those games, as we have seen on the Wii and Wii U.

I do need to acknowledge, though, that this is not all Nintendo’s fault; the other developers often did choose to leave on their own, for various reasons.  I think that those developers who left should have rethought it some — Rare, Left Field, Silicon Knights, and Factor 5 would all find much less success without Nintendo’s development support, that’s for sure, and the benefits of that Nintendo development support are something that has been fairly well documented from other teams they have worked with more recently such as Next Level, too. Again Nintendo makes developers who work with them better, and those studios all found that they could not replicate that magic without Nintendo’s help. But still, as the chief partner NCL deserves the largest amount of fault.  And Silicon Knights and Factor 5 particularly were both alienated primiarily by the Wii’s seriously lacking hardware power compared to the Xbox 360 and PS3, the other consoles of its generation… and the Wii’s low-power, casuals-first design was a response to the Gamecube’s failure to sell despite its being very powerful, about as powerful as its competition that generation.

Losing Rare, and Rare’s Games

But while all of those studios had been important, the loss of Rare is the signature one.  Nintendo and Rare parted ways in late 2002, shortly after Rare’s only Gamecube game, Star Fox Adventures, released.  Rare’s co-founders the Stamper brothers wanted to retire, and Nintendo had first dibs at buying the rest of company, but refused an offer to buy up the other 50% of the company for some not-very-good reasons.  Some Rare people wanted to try moving beyond Nintendo, as well.  So, both the Stampers and Nintendo sold to Microsoft.  This was a disastrous mistake which, in my opinion, Nintendo still has not gotten over.  Yes, Microsoft paid Nintendo $100 million dollars for Rare and probably have not gotten that much value back as Rare declined in success over the course of that decade, but Nintendo needed Rare’s games more than that money, and Rare needed Nintendo’s audience to sell lots of copies of their games.  The two worked together well, and neither have quite been able to replicate that since they separated.  The expense of buying the other half of Rare would be a $100 million better spent than gained because of the long-term benefit Nintendo would have gotten.  I know Rare has many critics who do not believe this, but it’s true.  I think Rare was starting TO recover when Nintendo and the Stampers doomed any chances of that happening that generation by selling them to MS. That sale is what really messed up Rare, worse than anything from during the Nintendo era.

Indeed, I have absolutely no reason to believe that a Rare that stuck with Nintendo would have released as few games as Rare did during those years, and their games would have sold better as well.  Rare’s critics significantly under-estimate how important Donkey Kong was to Rare, for example; the DK games were among Rare’s best sellers.  Donkey Kong 64 is Rare’s best-selling 3d platformer, not the Banjo games.  Even beyond losing the GC audience, losing Donkey Kong is something that Rare’s sales have never recovered from.   Rare wasn’t sold until September 2002, well after the GC’s November 2001 release. Rare had no GC games early on because they had some struggles moving over to the next generation, and then just as they were working through them and were ready to start releasing stuff, they got sold to MS and had to start all over on a new console… and then had to do that AGAIN a couple of years later because of the early X360 release. Maybe Rare’s best games were going to be on the N64 regardless, but I don’t think the “Rare wasn’t worth it anymore” narrative would be nearly as popular as it is had Nintendo kept Rare, their games in the ’00s would have been more and better.  Nintendo’s Japanese studios had struggled with the SNES-to-N64 transition, and Rare helped bail them out there.  Losing patience with Rare just a few years later when they were going through similar issues was incredibly hypocritical and wrong.

Had Nintendo kept Rare, the GC absolutely would have done better. It would have helped the Wii as well. Rare was key to Nintendo’s success on the GC.  People who claim Rare had become irrelevant are overlooking how important that Nintendo audience, and Nintendo input, was to Rare’s success, I would say.  With Nintendo, Rare would have been a much better developer than they have been with Microsoft; Nintendo makes developers who work with them better, and messes with developers less than Microsoft does.  There are bad stories out there of what MS did to Rare!  Rare’s 3d platformers would have been huge, instead of abruptly ceasing to exist, first.  Xbox beat ’em up game Grabbed by the Ghoulies was going to be one had it stayed a Gamecube title, there would probably have been something from the Conker team instead of the Xbox port of the N64 Conker title that they did release, and maybe also a DK and/or Banjo game.  More 3d platformers were sorely needed on the Gamecube, a platform with a very thin first-party platformer library.  Rare had covered for Nintendo’s inability to make more than one first-party 3d platformer on the N64, but couldn’t do that again because they left and were not replaced.  Donkey Kong Racing would have been a great complement to Mario Kart: Double Dash, as well, in the racing genre.  Nintendo also really needed Perfect Dark Zero to bolster their shooter selection, and Kameo would have been just as good as it is on X360, that is, great.  Yes, many of these are genres Nintendo made as well, but complimentary games help sell consoles.  That’s exactly what sold the N64, with both Nintendo and Rare titles, and that’s why MS has both Gears and Halo, and not only one of them. And that’s what Rare gave Nintendo.

And there likely would have been a few more games than that, too, as having to switch platforms twice that generation, from Gamecube to Xbox and then Xbox to Xbox 360 in 2005, really threw off Rare’s game output.  We know that Rare had a lot of games well into development and would have started to deliver titles for the GC in later ’02 and into ’03.  Even if some games ended up delayed, Rare’s games, once released, would have sold well and filled in those software droughts just as expected.  Rare was one of the best developers of the 5th generation, and had Nintendo not been so foolish as to throw them away that could, and should, have continued. Ditching Rare just because they were having a hard generation transition was incredibly short-sighted, considering how just a few years before Rare had saved Nintendo when NCL’s Japanese teams were having those same kind of troubles on the N64! Rare found that MS was much less likely to approve the games they wanted to make than Nintendo had been.  Iwata’s shift away from Western first and second parties was a definite mistake.  If Rare finished the games they were working on on the GC in ’02, and perhaps added a game or two to that by the time the GC was done, that’d be 5-7 games for the system, all major releases. It could be even more than that if there were more later titles. Some would surely have been successful and good. Even Star Fox Adventures did fairly well, even if the game was disappointing gameplay-wise. So yeah, who can say? Well, just look at their projects in development and extrapolate from there.  With Donkey Kong and Rare’s own IPs both, Rare would have continued to be a good studio.  Even if they couldn’t quite recapture their N64 greatness, they still would have been successful and popular.

Losing Rare to Microsoft Made Things Worse

While keeping Rare would have helped the Gamecube, what it would not have done is made the GC as successful as the N64. The problem is that Microsoft’s entry into the industry hurt Nintendo the most that generation. The Xbox stole away the core Western shooters-and-such audience who had owned N64s, and after failing to recapture them with games like Metroid Prime and Geist Nintendo gave up on that audience for good. S GC to early Wii-era strategy that didn’t give up on almost all of Nintendo’s Western relationships would have helped for sure, but I don’t think it could have stopped Microsoft, with Halo and then later Gears and such, from taking that audience. The best Nintendo could have hoped for was to hold on to a bit more of it than they did… but even that could have meant a lot in the long run, if it meant more third-party support for the later GC years and the Wii. That may be too optimistic a scenario, but losing all of the studios I listed earlier really did hurt.  The new strategy, focused on contracting out single games with external teams much more often than buying developers, works, but leads to less certainty than when you know a developer is working with you.  Namco isn’t making Ace Combat games for Nintendo systems just because that team worked on Star Fox Assault, for example.

Still, MS was set up for success with the American shooter-fan audience. They aimed right at it, and got the games and marketing just right.  Microsoft’s most important release was Halo, and with that they won over shooter fans, both those previously PC-only and those who had loved Goldeneye.  Nintendo didn’t, or couldn’t, match it.  MS also pushed the mostly PC-focused Western development base to also support their console, and publishers, starting to struggle because PC-only sales weren’t keeping up with the rising costs of development, listened.  Over the course of the ’00s this badly damaged the US PC game development base, but was a big boost to console development.  Nintendo ended up mostly missing out on this, as a lot of games either were for Xbox, or were on the PS360 and not Wii.  Nintendo selling their one FPS team to Microsoft certainly hurt them, but by the time they sold Rare to MS, a lot of the damage had already been done thanks to the success of the first Halo game.

The problem is, Halo was released in late 2001, right when the Xbox and Gamecube both launched.  I don’t think there’d have been much of a chance of Rare finishing their next shooter, Perfect Dark Zero, in only a year and a half, considering that PD was an early ’00 release. If they could have gotten it done by launch though, or by spring ’02 at the latest, yes, I think it would have made a real difference… but MS’s entry still would have been a huge problem for Nintendo. Even if Nintendo did everything right, MS’s existence as a company aiming straight at shooter fans and PC game developers was going to take away a good chunk of N64 fans. But Nintendo could have done better than they did at trying to hold on to what they could.  Instead, Nintendo decided to sell Rare in fall 2002, and PD Zero still wasn’t out, though Metroid Prime was only a few months away. As an aside I always did find Halo only decent, while Metroid Prime is one of the best games ever and the far better game, but most people disagreed, unfortunately… and I can’t deny that it has good multiplayer (on splitscreen and LAN; Xbox Live didn’t exist yet), while MP of course had none.  The end result of Nintendo’s loss of Western core gamers was the Wii’s casuals-first strategy, which was hugely successful for a while before crashing on the rocks of the rise of smartphones, while losing almost all remaining Western developers.  Short-term gain, long-term pain, there.

The question is, could a PD Zero in, say, 2003, or maybe even later, have helped the Gamecube keep up with the Xbox in that market?  I’m skeptical, and think that it’d have probably been too late. Maybe if PDZ could have released in 2003 it could have made a difference, but if it slipped later than that, it’d be simply too late to matter much. And of course it’d need to be a great game, too. The PDZ we got on the 360 in late ’05 wasn’t as good as the first game on N64 had been, certainly. Who knows how an earlier GC version would have turned out.  But even so, some help would have been better than selling that team to your primary competition for that audience!  So yes, the GC would have done better with Rare. How much better I don’t know, but it would have done better, and had an even better overall library — and even as it is the GC is my favorite 6th-gen console. However, the GC would still have finished miles behind the PS2, the Xbox still might have finished second worldwide (though maybe not, the gap was only a few million so who knows), and Microsoft still would have taken most of the American “core” gamer audience away thanks to Halo taking on the Goldeneye mantle for popular console shooting games. Those things are all true.

Still, though, dropping Rare was a big mistake and even if it couldn’t have “saved the Gamecube” all on its own, giving up and selling Rare off hurt. Rare’s output has still not really been replaced, Nintendo released more 3d platformers on the N64 thanks to Rare than on any console since, for instance… and those post-Rare years in the ’00s were painful for Donkey Kong games, as Nintendo struggled to figure out what to do with DK without Rare around to make the games. And yes, DK64 is amazing and one of the best 3d platformers ever, the haters are all wrong!  Also, the other games Rare was working on when Nintendo sold them, including Kameo, the original 3d platformer version of Grabbed by the Ghoulies, Donkey Kong Racing, and maybe other unannounced games (Conker 2? Some DK or Banjo platformer?), timing wouldn’t have been as critical because those games would appeal to the audience of Nintendo fans who did own Gamecubes.  That audience wanted PDZ as well, of course, but a lot of Goldeneye fans had bout Xboxes, not GCs, and if you want to have the GC do better, you’d need PDZ to convince at least some of them to buy Gamecubes. And considering how previously supportive third parties such as Acclaim, Lucasarts, and Midway started abandoning the Gamecube in and after 2003 because of lacking sales, time was of the essence if the system was going to keep that from happening!

So, in conclusion, I cannot think of any situation where Rare gets as irrelevant under Nintendo as they have been for years under Microsoft.  Even a lesser Rare would still have still had much better sales than it has had in our history since leaving Nintendo.A Rare releasing a mixture of new games and pretty good DK titles would have had more than enough sales to justify continued support.  Nintendo and Rare needed each other, and today Nintendo still needs a new Rare.

Conclusion: The Wii and Beyond

As a result of all of the above, the Gamecube failed to sell in the US as well as the N64 had.  Third parties started out supporting the system reasonably well, but as sales failed to match expectations, by 2003 most Western third parties dramatically cut back on GC support.  From that point on the system only got more family-friendly games and the occasional major title, with very few major exclusives or ports.  As described earlier, Nintendo’s response to this was the less-powerful Wii, and we all know how that went for Nintendo and third parties — the GC-era losses became permanent, and Nintendo now has entirely lost the core Western base, both developers and fans, at a time when they are absolutely vital for success as the number and quality of Western console games rose dramatically over the course of the ’00s and beyond, as those studios Microsoft helped lure over from the PC side focused on consoles.  Those developers wanted to support systems powerful enough to keep up with the other major consoles and the PC, and the Wii was not that, even if it is a great console and certainly my favorite home console of its generation.  Nintendo lost Western developers at exactly the wrong time.  I like the Wiimote, but Nintendo needed both traditional games and the new stuff that controller allows.

Beyond the issue of Rare, the basic question is this: Which would be better for Nintendo overall, either doing as they did and prioritizing lower-power systems with a heavy casual gamer focus with the DS and Wii, or making some other system that perhaps still had the motion controls, but was more powerful, enough so to be competitive with the other two systems?  The issue is, the Wii had its greatest success in the early years of the generation, when the Xbox 360 and PS3 were expensive and constantly failing due to hardware issues.  Could a more expensive Wii have replicated its success?  And if not, would it be worth it?  That generation, the Wii was just right particularly from 2006 to 2010, so perhaps not.  However, losing Western developers as Nintendo did had very serious long-term implications, and the Wii U has done badly in part because of that, as the casuals did not stay and the hardcore were gone.  Some would say that Nintendo were doomed either way, but as a Nintendo fan I don’t believe that.  With more and better games from Western teams, the Wii and Wii U would have been more successful with core gamers than they have been.  So, dropping teams like Rare, Left Field, and Factor 5, and not replacing them with Western teams on their size and caliber, did more harm than good.  There is no definite answer to what Nintendo should have done, but I have always thought that the Wii was somewhat underpowered, more so than it should have been, so I’d lean towards that.  Nintendo did not need to match the PS3, just be closer than they were.  Third parties would surely still have mostly ignored the console, but if it was easier to port games over to from the PS3 or X360, we probably would have gotten more high-quality third-party releases than it got.

So, as for me, while it is entirely possible that had Nintendo kept Rare everything else would have happened very similarly to how it did in our history, I do think that it would have made a positive difference for both Nintendo and gaming in general.  Would it have been enough to nudge Nintendo into making the Wii more powerful and not giving up on system power, while still innovating with the Wiimote?  If that is even a “perhaps”, then selling off Rare was a mistake.  Rare was a great developer, and keeping them would definitely have meant more great Rare games on Nintendo systems, and Nintendo would have been better off if they had had that; Rare’s games were always a draw, particularly their Donkey Kong games.  Post-Nintendo Rare made some great games, such as Kameo and Banjo-Kazooie: Nuts & Bolts, but without Donkey Kong or the Nintendo audience they could never recapture the level of sales they needed to convince Microsoft to let them keep making games like that.  With Nintendo that would not have been an issue.  Developers are not all going to stay great forever, but Rare’s collapse was largely externally-ordained, not because of internal problems.  Even if those other studios would not have stayed great even had they stuck with Nintendo, and as much as I like many games from all of those teams that is entirely possible, having Rare at their side would benefit all Nintendo consoles.  And a continued focus on Western developers, with a more independent Nintendo of America reacting to the changing market here more quickly than far-away NCL Japan can, would help.

But regardless of how things could have gone, with things as they are, as casuals switched from the DS or Wii over to smartphones Nintendo lost a lot of sales.  But unlike before, there is no obvious route to turn to to turn things around.  Casuals are gone, and MS, Sony, and PCs have locked up core gamers.  Nintendo today has virtually no third-party support on their home consoles outside of indie games on their eShop downloadable platform, and on handhelds only Japanese studios still release many games for Nintendo.   This is worth repeating because even if people today know these things, all of this happened because of Nintendo’s reaction to the Gamecube’s failure.  With a more successful Gamecube, maybe Nintendo does ot react as strongly against powerful hardware.  While it is true that Nintendo does not have the same amount of money as Sony or Microsoft, and reacting to their big bucks by retreating and focusing on games and innovation such as the Wiimote instead of continuing what they had always done before and releasing systems as powerful or more powerful than the competitions’, the end result of that path has not been good.  The glory days of the “it prints money!” DS and Wii have been replaced with today’s struggles to find a place in this quickly-changing industry.  I love Nintendo, and hope that they continue on as not only a developer, but also a hardware manufacturer.  For now consoles do still have a place, and I want to see Nintendo find something that brings sales and developers back to their platforms again.  But success based purely on first-party offerings will be difficult, and after progressively alienating developers, and watching a new business take away the people they brought in thanks to the Wii and DS, that future will be difficult to find.  Nintendo needs to find it, though, and with skill and luck they can.  I badly hope that this industry will not collapse in favor of nothing more than terrible, exploitative fee-to-play mobile games, that would be a dark future indeed… and yes, that Nintendo now makes a few such games is not something I love.  But that is another issue.  For this article, I will conclude by just saying that yes, I love Rare, and still hope the studio can return to at least some of its former glory.  Perhaps their new pirate-themed game for the Xbox One will do that, we will see.   But it will probably be less successful than some comparable Wii U game would have been, even with the Wii U’s limited sales…

About Brian

Computer and video game lover
This entry was posted in Articles, Gamecube, Modern Games, Nintendo DS, Nintendo Wii, Research and tagged , , , , . Bookmark the permalink.

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