Rare was one of the most revered devs of the 90s, they rivalled and even surpassed Nintendos offerings on the SNES and N64. They produced some of the best games in their genres on a consistent basis with Goldeneye, Perfect Dark, DKC, Diddy Kong Racing, Killer Instinct, Conker and Banjo.

So how does a studio which made some of the best fighting, shooter, kart racing, 2D and 3D platforming games regress to its current situation?

Just before Nintendo sold them to Microsoft for $375M dorraz, Rare was already bleeding talent.

Why were key people leaving and why didn't Nintendo nurture them? Were they at odds with Nintendo? What happened to this company is one of gaming's tragedies.

To be honest by today's perspective selling Rare is one of the best moves Nintendo ever made but on the other hand we don't know:IF they kept making amazing games for Wii, Wii U and now Switch they likely would have already earned Nintendo more money than MS paid for them...

Maybe it was pride, maybe the games were too good and they didnt want their own games to look inferior. Just a guess

Good question, why did talent start leaving before they got sold off? Wonder if they knew Nintendo was going to sell them and started abandoning ship before it was too late. 

Ultimate Play the Game/Rareware/Rare was making great games since 1983. It's hard to keep up that level of excellence for decades. Eventually the Stamper brothers had had enough. David Doak, Steve Ellis, and Graeme Norgate wanted to try something new with Free Radical. Martin Hollis left to help Nintendo with GameCube.

The talent was leaving and Nintendo was unprepared to keep pumping money into the studio for more expensive and less impressive titles.

In my opinion, Nintendo has a Bungie/Naughty Dog. It's Retro. Formed in 1998 from former Iguana staff (the dudes who made Turok), it replaced Rare as the western studio Nintendo trusted with its IPs.

Look at the timeline here:

2001: Halo: Combat Evolved, Jak and Daxter
2002: Metroid Prime
2003: Jak II
2004: Halo 2, Metroid Prime 2, Jak 3
2007: Halo 3, Metroid Prime 3, Uncharted: Drake's Fortune
2009: Uncharted 2, Halo 3: ODST
2010: Donkey Kong Country Returns, Halo: Reach
2011: Uncharted 3
2013: The Last of Us
2014: Donkey Kong Country Tropical Freeze
2016: Uncharted 4
2017: ????

They have Retro.

Retro is a mid sized studio with only 70 staff. They're only 1/4th of what ND and Bungie are. In the last 15 years I've only seen Metroid Prime and a continuation of a Rare series from them. They're nowhere close to being Rare's replacement. If they were they would be a giant studio on par with ND and Bungie. Rare would have naturally evolved to being a +400 dev house like ND and Bungie over the gens.

Rare was doing whatever they wanted, pumping out classics consistently. Retro seems to do what Nintendo wants. Even the makers of Metroid Prime left Retro.

OK, well what have you seen from Bungie on Xbox? Halo. And Naughty Dog on PS? Jak, Uncharted, and The Last of Us. Don't act as if any of those studios are turning out new and creative games every other year like Rare did in its glory days.

And Nintendo would never support such a large studio. It's not in its design philosophy, especially when a lean and mean Retro can make amazing games without all the bloat.

What you have to understand is that no studio is ever going to replace Rare during its halcyon age. From 1994-2001, Rare had the financial support and stewardship of Nintendo, some of the best and brightest minds in the industry, and a work ethic second to none. Only Nintendo EPD can match what Rare did in the SNES/N64 days.

What? They have 128 employees according to Linkedin. 

https://www.linkedin.com/company-beta/19219/?pathWildcard=19219

The only reason Rare pushed out so many games is because game development was much quicker during the Nes-N64 days. Rare' last Nintendo offerings were all rather mediocre, especially compared to what Retro has pushed out. 

The "makers of Metroid Prime" haven't made a good game since they left Ninendo, so quite clearly they weren't the ones that made the Prime games so good. And let's wait until they announce their new game before we claim they only do what Nintendo tells them to. They might be making a brand new IP. Also, Metroid Prime is nothing like the games Rare made. 

Its about Support & Nuture. What Sony does, I suspect is more beneficial their developers, than what MS & Nintendo do.

Think about how many companies have come out and talked about how hard it was to work with microsoft?

Usually Sony when talked about its all positive, and how easy they are to work with.

Its probably gonna sell more on PS4, XB1, PC (gog, steam) than the switch.

They would hurt themselves if they went exclusive.