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Asriel said:
An article by Simon Parkin, from six years ago, sheds a lot of light on the matter. It's not as simple as saying 'Microsoft killed Rare', but neither is it true Nintendo were some kind of evil overlord who dictated terms to Rare and served them badly. Former staff at Rare point out that Rare's founders didn't realise how important their creative partnership with Nintendo was, and that Microsoft - a company with a very different philosophy - didn't provide that same kind of oversight and direction. At the time Rare started to look for buyers, they were still dazed by their success of the 90s, and seemed like one of the biggest studios on the planet - but they'd developed into that position through a very close relationship with Nintendo. It's also not true Rare were kept under a tight leash by Nintendo: Rare were technically independent due to Nintendo not having majority control over the company. While there was oversight, it was more of a creative relationship than a managerial or dictatorial relationship: that comes from former Rare staffers in both the Parkin piece and the Nintendo Life article I'll link below. While initially Rare had some creative freedom under Microsoft, when Microsoft got directly involved with managing Rare, Microsoft didn't understand how to mentor the studio creatively, but instead imposed differing business practices on Rare, which gradually eroded the company culture that helped Rare be successful. Microsoft don't have a strong track record managing affiliated or owned studios: Lionhead are another British studio who lost their way under Microsoft, though unlike Rare, they were shuttered. By way of contrast, Nintendo's owned and affiliated studios like EPD, Intelligent Systems, HAL, and Game Freak continue to turn out great games, as do more recent acquisitions like Monolith Soft - though it'll be interesting to see how Retro Studios fare when their next project finally launches.

I put a lot more stock in the thoughts and words of people who were actually there than in a bunch of quotes stuck together to fit a particular narrative and would recommend those interested in Rare's transition from Nintendo to Microsoft read this: https://www.eurogamer.net/articles/2012-02-08-who-killed-rare

The suggestion, too, that Nintendo and Miyamoto 'ruined' Dinosaur Planet is also somewhat removed from the truth. It's certainly true that the decision to turn Dinosaur Planet into Starfox Adventures wasn't willingly received by the entirety of the team making the game, but it's also unclear who made the ultimate decision to use the Star Fox license - Miyamoto certainly noted the similarities between Krystal and the anthropomorphic characters of Star Fox, but the decision to use the license either came from elsewhere in Nintendo, from Rare's own higher ups (who could see the benefit of using a more established license), or a combination of the two. This quote, from a former Rare staff member involved in Dinosaur Planet from its inception through to its release as Starfox Adventures, reveals the close partnership between Rare and Nintendo and the independence Rare enjoyed under Nintendo's oversight:

"Working under Nintendo was an eye-opening experience for Tossell, who is full of praise for the Japanese company. “Without doubt of all the time I've worked in the industry it was the most trusting and respectful relationship,” he says. “Of course, it helped because technically Rare was independent - Nintendo only owned 49% of the company, as far as I am aware. This meant that the Stamper Brothers [Rare's founders] didn't have to do anything they didn't want to. This contrasts sharply with how it is now where Microsofts own the whole company. Even accounting for that though, Nintendo knows games - its knows them inside and out and knows when something needs to be pushed and prodded and when it doesn't. And it understands that if you push and prod too much then you destroy any spark that a game may have. It's a delicate balancing act that Nintendo made look easy.”

See this feature on how the game came to be: http://www.nintendolife.com/news/2012/12/feature_the_making_of_star_fox_adventures

It's also important to consider the ways in which the industry changed following Microsoft's acquisition of Rare. It's not just Rare who struggled to move on from the creative practises and business culture of the 1990s, many other mid-sized Western studios and publishers lost their way, as did Japanese companies. Rare's transition from Nintendo to Microsoft happened as the industry transitioned away from the smaller-scale 'console wars' of the 90s and into the HD era, which decimated mid-tier development in the West in-particular. Smaller publishers like Codemasters, THQ, Atari and Acclaim all failed to adjust, as did other former Nintendo-affiliated mid-tier studios like Silicon Knights and Factor 5. After an initial wave of excellent, creative games (Panzer Dragoon Orta, Jet Set Radio Future, F Zero GX), Sega also struggled with their individual transition from platform holder to multi-platform publisher against the broader backdrop of a changing industry. The struggles of Japanese development as a whole and of mid-tier Western publishing and development as the PS2 era ended and gave way to HD gaming are well documented.

Either way, simplistic answers such as 'Microsoft killed Rare' or 'Nintendo failed Rare' don't reveal 'The Truth', as you claim. The truth is far more complex - some of the 'blame' can be attributed to the turbulent nature of the games industry as a whole, some of it can be attributed to Microsoft's mismanagement, but it's also true some of it has to be attributed to the higher-ups at Rare themselves, who over-estimated the strength of their own position.

Your post hits alot of nails on the head. Its not entirely Nintendo or Microsoft's fault for Rare, the industry did change drastically and making games changed. Sega was one of the biggest that failed to transit.

Rare was the Titanic of video games, they were state of the art, the biggerest, the best, but they just didnt pack enough life boats and no one could stop that ship from sinking.