I don't think Nintendo had much of a choice with Rare, as someone mentioned. Also I believe at the time Ninty sold them Rare's output was lagging pretty bad- SFA was taking forever and the dev time + sales of Conkers I think added to their woes. I'm pretty sure they can still make handheld games for Nintendo- they could do a Banjo port surely if they wanted, and see how it sold? IMO Banjo was their main loss from the Rare deal, but it wouldn't have been worth it to keep the thing. Shame BK3 had to kill the franchise.
As for Crash, I think he peaked on the PS1, same with Spyro. If I remember the PS2 versions didn't sell as well? and yeah it's for the better that ND moved on, I think they had more room to breathe with Jak and Daxter
Astrosquall1 ~
Now that's a signature!







