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In December of 2001, U.K. game developer Rare Ltd. mailed out Christmas cards wishing season's greetings to members of the video game industry. The back of the card featured a a Christmas tree with presents wrapped in the shape of current generation consoles laying underneath. The innuendo was made all the more direct by the the card's message that concluded with "...and surprises under every tree." The card set off a memorable flood of rumors on online message boards and in industry publications.

By mid 2002, individuals close to Rare verified that the developer was in possession of Xbox and PlayStation 2 development kits. Soon after, leaks from industry insiders confirmed that Rare was on the bidding block and that Activision was a leading bidder. By E3 2002, the company's imminent departure was all but confirmed when Rare was a near complete no-show at Nintendo's booth. With rumors running rampant throughout online publications and speculation on Internet message boards fervent, perhaps it was Rare's silence more than anything else that in recent months seemed to confirm the inevitable. 

Microsoft Corporation began searching for acquisition targets in early 2002 with the goal of significantly expanding internal development capacity. At the time, Microsoft found little success developing any system-selling games beyond the magnificent Xbox launch title, HALO. Jay Defibaugh, an analyst with CSFB explained, "It's very often the exclusive titles that drive hardware sales. Rare is a high-profile developer known for high-quality games." Microsoft turned to U.K.-based Rare Ltd. as the solution to their problems. In a deal worth $375 million, Microsoft announced the acquisition of Rare at the company's X02 Europe event on September 24th, 2002.

In April of 1995 on the heels of Donkey Kong Country's success, Nintendo bought a 25% stake in Rare and spent $15 million to co-develop Rare's Manor Park R&D center in Twycross, England. At the time of the investment, former Nintendo of America chairman, Howard Lincoln told the Wall Street Journal, "Rare is an outstanding company... This is our way of putting our money where our mouth is." The investment assured the second-party exclusivity of Rare for a set time period. In later year's, Nintendo increased their interest in the developer to 49% and gained 38% voting rights on Rare's board. 

With Rare founders Chris and Tim Stamper seeking an exit strategy and Rare's exclusivity contract complete, Nintendo was given the option of buying the remaining un-owned portion of Rare. Nintendo declined. Instead, Nintendo received $183m from Microsoft for its position. According to Peter MacDougall, Executive VP of Sales and Marketing with Nintendo of America, "Nintendo had the ability to continue its exclusive relationship with Rare, but in looking at the company's recent track record, it became clear that its value to the future of Nintendo would be limited... In other words, we passed on this opportunity for very good business reasons." 

It's expected that Nintendo will use the cash from the deal to invest in smaller development houses and expand relationships with larger developers as they have in the past with Namco and Sega. MacDougal states, "The disposition of this investment leaves us in a position to become even more aggressive in expanding our development capacity, both internally and externally. Aside from several partnerships already announced over the past year, we are currently in similar talks with several other prospective partners around the world." Nintendo is also quick to note that Rare contributed 9.5% to Nintendo's unit sales in the 2001 transition year and just 1.5% in fiscal 2002. 

In Microsoft's official announcement, it was revealed that Rare will introduce five games on the Xbox over the next two years including racers, shooters, and platformers. Kameo: Elements of Power will be Rare's first Xbox game when it is released in early 2003. Other greatly anticipated franchise include Banjo-Kazooie, Conker's Other Bad Fur Day, and Perfect Dark. Robbie Bach, Chief Xbox Officer at Microsoft, explains that the partnership, "broadens [Microsoft's] reach internationally as gamers around the world have demonstrated their fanaticism for what Rare consistently produces." Ed Fries, VP of Xbox Game Content at Microsoft also chimes in, "As a gamer, you could hardly wait until Rare's next title was announced. You didn't know what genre it would be, but it didn't matter because you knew you were going to love it."

Looking to the future, many exciting developments are sure to come out of Twycross, England. Rare recently provided a promotional video
featuring the company's top game characters. Information on Kameo is slowly forthcoming as Rare continues to update their Web site with new media and details. Meanwhile, the heroine of Perfect Dark, Joanna Dark has seen an anime-styled redraw that looks quite nice. Unfortunately, no word has been released thus far regarding Conker's Other Bad Fur Day. One thing's for sure though, we can't wait for E3 2003.

It's been a great ride over the years with Rare on board and GameCubicle is saddened to such a great company leave. We wish Rare the best of luck in their new endeavors. In a letter to their fans, Chris and Tim Stamper write on behalf of Rare, "We would like to thank all of the loyal game fans that have been great Rare supporters on previous formats over the years, and would like to extend a welcome to them to view the latest Rare games on the Xbox as they become available. We at Rare are excited to be working on the Xbox with its tremendous performance and potential for wonderful games. Going forward we hope to display some of these very exciting titles, and also hope that you share our passion for games!"  

September 24, 2002

Rick - Editor in Chief, GameCubicle


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