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Nintendo and Rare: Loose Change

Friday, September 13, 2002

The following editorial recently placed second in RareNet.com's "The Best RareNet Contest Ever"
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Nintendo and Rare: Loose Change

Nintendo has produced an irreplaceable void. That void, for those unaware, is the departure of Rare as a second-party developer.

Rare, however, is not without a void of its own.

Ask yourself this question: what is Nintendo without Rare? Likewise, what is Rare without Nintendo? Can one function to its full potential without the other?

We will soon be forced to discover that answer. In an unfortunate turn of events, these long time partners, furthermore, friends have turned their backs on one another...

A Look Back

Please be patient with a brief synopsis of Nintendo and Rare's history. Its purpose is to set the mood for the rest of the editorial.

Beginning in 1983, Rare, or as it was formally known, Ultimate Play The Game, began creating software for the home computer game system Sinclair ZX Spectrum. In creating its games, Rare's philosophy was one based on a timeless aspiration for perfection. Nintendo Famicom creator, Nintendo, coincidentally shared a very similar game creating philosophy.

Mid-1983 eventually saw the Japanese release of the Nintendo Famicom. It was also during this period that sales on the Spectrum had become obsolete. Rare was looking to expand its business and therefore had no reason to stick around the declining Spectrum market. Always on the lookout for the next big thing, the heads of Rare, coined "The Stamper brothers", managed to get their curious hands on the newly released Nintendo Famicom. However, their interest in NES was beyond simple curiosity. Rare wanted to use it as its new mode of software development. Fate would bring them together. It was only a matter of time before Nintendo made Rare's acquaintance.

A Match Made in Heaven

Rare eventually signed a contract that allowed it to create software for the NES hardware. During this time, Nintendo published various Rare developed games such as Slalom and R.C. Pro-Am. This was just the start of the formation of a symbiotic relationship between Nintendo and Rare. Their relationship however, failed to fully blossom until the early '90s.

Then along came 1993, when Nintendo announced a collaboration with Silicon Graphics on the development of its next generation game console. This was a catalyst for the meeting at Rare that would, in all respects, decide its future. Rare was in a transitional period. At the time, software licenses and the impressive SG workstation technology were a considerable investment. Rare's foresight into acquiring this leading-edge technology combined with a generous loan and contract from Nintendo of America, cemented both company's future relationship together.

For a company the size of Rare, this was potentially a hazardous venture and would have been a catastrophe had it not followed through. Although, as things turned out, the rewards it did accrue from Donkey Kong Country more than balanced the expenses.

In the spring of 1995, Rare's ability to create extraordinary software manifested in a landmark partnership with Nintendo. The Japanese videogames giant purchased a 25% share of the developer, "honoring it with the first fiscal investment it had ever undertaken in an overseas company." Rare would enjoy a privileged gateway to a widely expanding market.

Through the years that followed, Goldeneye 007, Diddy Kong Racing, Banjo-Kazooie, and others proved that the company had finally matured into one of the world's most important development studio. As well, selling millions upon millions of games, Rare unanimously proved to be a valuable asset to Nintendo.

Second-Party Life

What is behind this relationship the two companies share?

Both Rare and Nintendo are known for their reserved, "no comment" attitude. In fact, you'll be lucky to receive even that from these shy companies. This facet of Rare's character created a natural synergy when it began its collaboration with Nintendo.

Chris Stamper, technical director at Rare, wholeheartedly agrees,

"I think Nintendo were very comfortable with us because we weren't publicizing ourselves to a great degree. Our objective has always been quality first - that is number one - and I think that we show them these are the sort of games that we can write and that we want to produce and that is foremost in everything we're trying to achieve. I think there's a natural sort of synergy between us and I think it works extremely well in the present day; they don't get involved with us at all. I mean, we decide what games we're going to write, we decide exactly what we're going to do. They just expect us to produce great games, and that's exactly what we're here for."

The word delay was literally invented by these two companies. Both Rare and Nintendo are known for their generous use of delays. Reason being, neither company will release a product until it resembles perfection.

Chris jokingly adds,

"I think another reason, as well, is that there just aren't enough hours in the day. We're still working ridiculous hours, seven days in the week, and I'd much rather focus on the games we're working on than spend time promoting ourselves. We've always taken that sort of approach"

For those who have had the privilege of spending just a short amount of time at Rare, it will be revealed to you "that much of its working practices can be traced back to its relationship with Nintendo in the US, and perhaps more significantly in Japan". During the development of Nintendo 64 software, Rare staff would often be invited to Nintendo's Kyoto division where they were asked to look at Nintendo's latest projects and discuss its approach to N64 development.

Blast Corps designer Martin Wakeley admires this similarity.

"To be fair, the only real developers of our size in the world are NCL. They have the same sort of problems we have - they're in a very similar position to us. We can learn quite a lot from them and they also learn a lot from us as well."

The most obvious similarity between Rare and Nintendo is their golden reputation for insisting on software excellence. This is where all of those notorious delays originate.

When Nintendo of America's vice president of corporate affairs, Perrin Kaplan, was asked the reason behind the Star Fox Adventures delay, she confidently replied,

"Perfection. Have you ever known us not to change release dates on games in search of absolute perfection? You've seen Nintendo do this lots of times. It's the Goldeneye Syndrome. So I think what gamers will ultimately get is a great product. As well, Miyamoto has been spending a lot of time on it."

Their relationship goes bone deep. In fact, StarFox Adventures is a collaboration between both Nintendo and Rare employees. One cannot stress enough the similar design philosophy Rare shares with Nintendo.

Tim Stampers, creative director at Rare, agrees.

"I think we've been working with them for so long, we've been working with them for 12 years, 13 years - it's a long time. And our sort of target audience is the same as theirs. We want games to do well in Japan and America and it wants to be basically the same game, and it's taken a long time and a lot of hard work to achieve that."

Rare has assisted Nintendo in more ways than one can comprehend. Nintendo has provided Rare with various franchise characters to include in its games, including Donkey Kong and Star Fox. It's a very symbiotic relationship. Nintendo benefits by freeing up in-house resources, thus allowing it to work on new game titles. Nintendo also benefits because it has a partner who can further build its brand identity and personality with product that would appear exclusively on its platform. Rare, on the other hand, benefits from receiving full funds for game development and as well incredible profits due to its use of an established Nintendo franchise.

Nintendo puts different things into consideration when handing out such franchises.

Satoru Iwata, Nintendo Co. Ltd. president, explains,

"In the case of Super Smash Bros., that was actually a conversation that was brought up by HAL with Nintendo. That was, of course, back when I was still with HAL and as a longtime partner of Nintendo, we thought that such a game would be a benefit for both sides.

In the case of games like Metroid and Wave Race for GameCube, those were actually conversations brought up by NCL. They thought it would be a great way to get more games out there and establish franchises.

On the other hand, in the case of Star Fox Adventures, rather than one side bringing it to the other, it just kind of naturally evolved into the game after discussions on both sides. We've been working with Rare for a long time and it was just a matter of our hearts coming together."

Rare and Nintendo even share a similar game-playing audience. Many have labeled Rare and Nintendo 'kiddy'.

Chris feels no guilt from this fact.

"I love the "Nintendo-style" games, so we are making games for ourselves. For me, DK Racing is a game style that will have appeal across the generations, and I think that's great. I don't want to play games that are targeted or skewed for the higher age groups. I want to play something that's fun."

Tim Stamper holds the same beliefs.

"Working in the software industry it's always great to see other companies producing number one games or games that are really, really good because I think it perpetuates the industry. We're all gamesplayers here, we love to play other people's great games and it is disappointing when you go out onto the streets and take your hard-earned money and you buy a game that looks good and you're unhappy with it. It's kind of a part of our idea - traditionally our audience is younger than the PlayStation audience, which is 21, our core audience is probably the 12 year old - they haven't got a lot of disposable income and it's very, very important that when they buy a game that it's good, and I like to think that we did everything we could to make that game as good as we possibly could because these young kids are going to spend their money on it. So I think that's really important and maybe if other companies had that kind of concept rather than just putting a game out because of getting pushed by the deadline, there'd be more high-quality software."

Nintendo's Satoru Iwata offers Nintendo's view regarding its target demographic.

"Our approach is not to look at the successes of other people and try to repeat those successes. We don't look at the success of Grand Theft Auto 3 and think that maybe if we create games for older audiences will see a similar success. Rather, we think about, how can we find ways to surprise and bring excitement to people. To do that we have to try and show them things that they have never seen before. That's our real approach. And if that's not your approach, then you cannot do new things -- like Pikmin, for example. People have always asked us, aren't you worried that Microsoft is coming to the game industry? But the fact of the matter is, that because we are competing on such a different level, we have never once been concerned about it at all.

The truth is, we've always focused on making games for all ages and trying to have a library that will appeal to young and old. Nintendo has always focused on having games that the entire family can enjoy and I think in that sense we will continue to promote that and move in that direction.

At the core how we make our games isn't going to change. One thing that we are really proud of is the fact that we can make games that young people will enjoy. But really I think it's a question of how we are going to focus on giving people an image of Nintendo that we think is accurate. For a long time in the US there has been this negative feeling about gaming as something you do in a dark room, and what we're trying to do with GameCube is bring it out of the dark room and put it in the living room where the whole family can sit and enjoy it."

This doesn't mean however, that Nintendo and Rare are unwilling to create games intended for teens or adults. At Nintendo, age transcends the quality of software.

When asked how Nintendo would approach the marketing of Rare's Conker's Bad Fur Day, Peter Main, Nintendo of America's former vice president of marketing and sales, explained,

"Very carefully. I think it's really important for us. Everyone says, "Hey, that doesn't look like Nintendo. What's 'this' and what about 'that'?" We've had a lot of discussions over the last year and a half about whether or not we want to compete in 100% of the videogame market, or do we want to just compete in 50% or 60%. The answer is that if we understand the videogame business, that's the business we should be in and we should be there wholeheartedly. So now, how do you do it with the older players? We struggled with that a little bit because it's obviously not an area of expertise for our internal development groups in Japan, and so we sought it out in Rare and other second-party groups. And then we dealt with the marketing side of it and said, well, do we hide behind some funny veils that explain, "This is kind of Nintendo, but not really Nintendo." Should we put it under a new X-brand? At the end of the day, though, we decided that it was just a big run for a short slide; it's either Nintendo or it's not Nintendo. Our real mandate was to ensure that the product that ultimately got rated Mature was really a great game as measured by all of our basics of playability and interest, and so on. Then we had to make sure that the communication about what was in that game was clearly directed at the audience for who it was intended."

Rare and Nintendo were like two peas in a pod, Adam and Eve, potatoes and gravy, college students and beer - a truly symbiotic relationship. In recent years, the companies were so close in fact, the average uninitiated gameplayer probably wouldn't even realize the difference between the Nintendo brand and the shiny Rareware logo.

That however, is now but a memory of reality. As the proverb goes, it's best to have lost a love than to have never known love.

The Collapse of a Union

What is Nintendo's philosophy behind its second-parties?

Peter Main explains,

"Basically Nintendo has had several well publicized challenges over the recent years. As part of the industry went to CD based product we remained with cartridge based product and all of the contentious issues about financial models, lead-times, inventories, etc. We continue, let me say, to have the utmost respect for the third-party world and its potential to be a very important part of our program going forward. However, in recent times a number of things have happened beyond that. Brand loyalty, by virtue of games being available on every platform, has somewhat reduced since the NES days when we did have platform exclusivity. We know that core to our business are the franchise characters that we own. We know the limitations of our own development skills. In that line, we set out to find partners who could further build the brand identity and personality with product that would appear exclusively on our platform. We're not a cash poor company, so bringing financial resources to groups that show tremendous creativity and development potential makes good sense. The second-parties have become very logical extensions of what we do so well with our group in Japan and NST now in America. And given the rate of change with new platforms, and what essentially in engineering terms becomes fast-track projects, in order to make them happen in the least amount of time, you need to bring people into your tent long before you're finished. That is better done with internal partners than external ones.

That all said and done, we think it helps us, especially in our next go-around, come to market with more product, and more diverse product, created by people who didn't have to wait for final tools to be made available, and instead could do it on the fly with us as we develop the components.

But again, Nintendo has in no way, shape or form turned its back in licensees and third-party developers. There are a good number of superb people that we look forward to having even more active involvement in the years ahead."

Over the years, Nintendo has taken many companies in such as Left Field, Silicon Knights, Retro Studios, and Rare and have basically given them full funding -- babied them up to create great games and expand their studios. Can we expect to see more second-parties signed in the near future?

Peter Main ponders this question for a moment.

"Well, we don't have a help wanted ad out. We continue to search the world for the right people and the right situations. Our announcement a week ago about Silicon Knights was exactly that kind of process. Proven capabilities, technically very competent people, and ready to do some great work on the fly with us. And we'll continue to look to existing second-party people in helping them grow their own teams and leverage their own skills. Our financial support there can be very important in addition to new embryonic situations that we can grow."

Second-party, Rare's Martin Wakeley recognizes his company's importance to Nintendo.

"You do tend to forget on a day-to-day basis how large-scale this is. And then you have a conversation with Howard Lincoln and you realize you are actually a core part of their marketing campaign and NOA's whole structure. They rely on you as much as you rely on them."

If Rare was such an integral part of Nintendo of America, where exactly did the threads begin to unravel within Rare and Nintendo's quilt? What drastic event could have split these two companies apart?

It wasn't a single event per se. Instead, the threads of Nintendo and Rare's quilt were plucked one by one.

First, you need to take a look back and see the fallout of some of Nintendo of America's most influential people.

The first thread to be pulled occurred all the way back in early 2000. This was when long-time Nintendo of America chairman, Howard Lincoln left to join the Mariners board of directors. A mass of subsequent departures followed, beginning with Nintendo of America president Minoru Arakawa retiring on January 7, 2002 (After 22 years with the company), followed by Peter Main, executive vice president of sales and marketing, on January 31, 2002 (After 15 years at Nintendo), and Ken Lobb on March 01, 2002.

Ken Lobb, in particular, had the most interesting departure out of the bunch. He left Nintendo to take a position at Microsoft as its Xbox Director of Content Planning. While at Nintendo, Lobb played an integral part in working with Nintendo and especially its second party developers. "His contribution on the Rare game GoldenEye earned him an immortal spot in the shooter as the Klobb Gun (Ken Lobb Gun). In more recent times, Lobb was involved with such GameCube projects as Star Wars Rogue Squadron 2: Rogue Leader and Metroid Prime." With internal problems at Retro Studios last year and neither Rare nor Left Field's second-party contracts being renewed, you'd be naive to think these were not related to Ken Lobb's silent defection to Microsoft. For the mismanagement of its second-parties Nintendo of America would be held accountable. And with its lack of strength due to the departure of head figures such as Lobb, Arakawa, and Main, NoA's power has significantly diminished over the past year.

John Taylor, managing director and analyst for Arcadia Investment Corp. agrees.

"Japan is probably becoming a bit more influential in the day-to-day management decisions at Nintendo of America. It seems that might have been going on for a little while."

Add to this the retirement of Nintendo Co. Ltd. president Hiroshi Yamauchi on May 31, 2002 and you've got a breeding ground for 'change'. In his replacement, Yamauchi left Nintendo of Japan with a new corporate model. While Satoru Iwata was named president, he doesn't have the same control that Yamauchi had before him. Instead of a single entity having full power, six executive board members formed a management team. Vital decisions are made as a group.

Different minds now encompass Nintendo, from the shores of Japan to the coast of Washington state. With all of these threads pulled from Nintendo and Rare's quilt, we've nothing left but a worn out, weathered rag. After all is said and done, it was Nintendo's board of directors who were unwilling to commit the yen that would have absorbed Rare exclusively.

Money...it rules the world.

Shigeru Miyamoto explains,

"As the graphics in games become more detailed and the worlds grow, it becomes more and more expensive to produce games and it takes a lot more time to develop them. And yet at the same time, the consumers are demanding games at regular intervals. And so there is kind of a tendency to create more compact games, but the designers aren't responsible for creating a product, but for creating new things. And that's really what our focus is."

If a company cannot produce games at regular intervals... And those games that are produced fail to garner sales, that company is ultimately a failure. Rare's last release was Conker's Bad Fur Day in 2001 and was met with dismal sales. For a 200+ development group to have failed to release a game since, it's bad news.

Nintendo of America's Jasmine Ramya comments.

"Although Nintendo doesn't comment on rumors or speculation by the media, we can tell you that Nintendo has made the decision not to request Rare to make any further exclusive games for the Nintendo GameCube. Although we're proud of our joint efforts with Rare over the years and have enjoyed our relationship with them, in fiscal year 2001, Rare accounted for only 9.5% of total Nintendo software revenue worldwide. In fiscal year 2002, that number declined to 1.5%. Therefore, in evaluating our investments in developers, as well as the financial benefits to Nintendo over the years, we've decided it's in Nintendo's best interests to focus on diversifying our portfolio of developers and projects."

Times are changing. Nintendo's former president, Hiroshi Yamauchi, understands the industry all too well.

"There are a lot of new software companies coming out of the woodworks, but there are only a few that are good. Relationships with the software makers have changed since 10 years ago, five years ago, and even three years ago. It will also change with the coming of this new game system, but we cannot be 100% sure how it will change. We take in those who want to create a game for us. After we take them in, we speak to them about not creating poor quality games.

Some are under the impression that other software companies are superior to Nintendo, and we acknowledge that there have been some who have done better. However, the situation has since changed, and we cannot depend upon software makers who are not good."

While Rare's worth can be argued either way, the fact remains, Rare's worth to Nintendo has diminished. It is neither producing games in a timely manner nor is it producing games that are achieving satisfactory sales...or so story goes.

Microsoft's Entrance

Satoru Iwata was once asked if Nintendo would make plans to purchase a third-party developer. Satoru was adamant in his response.

"That is absolutely not going to happen. It's not part of our culture to even think about outright purchasing a third-party developer."

Microsoft on the other hand has done just that. There are both benefits and disadvantages to a situation such as this. On one hand, Microsoft has acquired a company with established franchises and technology. On the other hand, employees, the people who actually make a company, may not agree with the new leadership and leave.

Satoru Iwata plainly lays it on the table.

"Our philosophy really is that if you do buy a third-party company, if the people then leave that company your talent is gone. You don't have that anymore. In the same way, if you buy a license you have that exclusivity period, but who knows what's going to happen after that? Really, the most recent example of that was Crash Bandicoot. That game was marketed and generated a lot of popularity and did really well, and then the exclusivity ended. It's not Sony's anymore. So it's not something that we really want to be doing."

Then again, if there is any company that's prepared, as well, experienced in dealing with the effects of acquiring a company, Microsoft is it. A brief history of some of these developers Microsoft has absorbed include: Bungie Software, Digital Anvil, Ensemble Studios, Gas Powered Games, Relic Entertainment, FASA Interactive, NetGames USA, Access Software, and Big Huge Games. Rare is obviously not the first.

Despite Microsoft's experience, its most recent acquirement in the form of Bungie Software didn't escape the casualties of a company buy-out. For personal or professional reasons, several members of Bungie's staff elected not to come along, including Peter Tamte, executive vice president of publishing.

This is just one of many accounts. What is to become of Rare's employees is unknown. While a few are bound to leave, the majority will most likely stay and endure the change.

Hiroshi Yamauchi's comments.

"There are a lot of people who really do not know about games in the industry. Especially one big company in the USA thinks that it can use a lot of money to surround itself with software companies and accomplish what Nintendo has done. We don't think it will go that easily. It seems that they will be bringing their system out next year, and the results of how well they actually do will be known to us in the beginning of the following year."

It's humorous to see what foresight can bring oneself. Microsoft has done exactly that, yet it remains to be seen, and is the question everyone is wondering, can Rare accomplish the same success under Microsoft that it did beside Nintendo? Although with unlimited funding under Microsoft, many believe the sky is the limit.

The Future

Half a decade ago, Rare was asked, "Where do you think you're going to be in five years' time - do you think you'll be developing videogames or do you have ambitions to do something else?"

With a twinkle in his eye, Chris Stamper smiled and replied,

"No, I think that we'll still be around. Our plan is to actively encourage the new generation of designers and engineers within the company. I think myself and Tim are now taking a more overseeing sort of role and I see that continuing. We've got so many great people coming through that already it's more their sort of games that are being produced. I still think we'd be pretty much the same thing."

Is Rare now but a fragment of its former self? At the end of the day, Rare as we know it will never be the same. Unfortunately, the same can be said of Nintendo. What does the unpredictable future hold for these former allies, these friends of yesterday? No one honestly knows. What is known, however, is that life will continue and video games, which is what this industry truly is all about, will continue to be made. Two corporations destined to be together, their thoughts, their ideals, and their games, everything done beyond what people expected -- now split, to travel their separate ways. With a memory, we wish a farewell to those we once knew. What games are Nintendo and Rare most proud of?

"We at Nintendo want to create video games that customers as well as developers have not yet seen. While I don't know what that is, I think it's my job to search out and find what that new thing is going to be."

And as Rare put it,

"The ones we haven't written yet."

They may no longer be together in a technical sense, but at heart Nintendo and Rare are still one.

The best of luck to them both.

Sources: IGN, CNN.com, Ultimate Wurld, Raretopia, ieMag.com, Rarenet, Game Over: Press Start to Continue, Next Gen Magazine, Electronic Gaming Monthly