Emily Rogers put out a giant piece on the gamecube and this was a quote from it which I found fascinating, basically Microsfot was pissed at Nintendo for not agreeing to buy them and this is how Microsoft wanted to screw them over to try and hurt their stock value.Although Microsoft was the highest bidder to purchase Rare, Nintendo still had the priority option to purchase the company. To prevent Nintendo from buying Rare, Microsoft raised their bid as high as possible so Nintendo wouldn’t be able to match it.
I always blamed Nintendo, I think I blamed the wrong company.
A Dolphin’s Tale: The Story of GameCube — Dromble
EDIT: Here is more on the debacle
“In the end I understand Mr Yamauchi [Nintendo's President] declined to offer more than a fraction of the value Rare was asking; shrewdly, it would seem. Meanwhile Microsoft had a strategic reason to buy, two reasons really: firstly so Nintendo would not have Rare’s games, and secondly so that Microsoft would,” said Hollis
Nintendo’s George Harrison explained to Electronic Gaming Monthly that Rareware hurt GameCube’s momentum by failing to deliver any games within the launch window. This was compounded by the fact that Rare Ltd. was one of the first studios to receive development kits.
“…when we launched the GameCube, we put the concentration of our development kits in the hands of only a few people — internally, of course, with Mr. Miyamoto’s EAD team, but also with Rare. And Rare didn’t deliver a single game for us at the launch, when their history had been to make some really great games for us in the past. That hurt us, and it led us into this gap of titles, starting after the launch and lasting for about seven or nine months until Mario Sunshine came out. Consumers want consistency. They would never buy a DVD player that had only one or two good movies a year; they want consistency and variety, and we’re trying hard to make sure that’s not only resolved for the GameCube, but as we go into the next system,” says Harrison
Harrison’s comments weren’t the first time that Rareware was blamed for hurting GameCube’s momentum. When Nintendo of America’s Jasmine Ramya was asked about why Nintendo was no longer working with Rare, this was the answer given:
“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,” said Ramya.
Both responses seemed unusual for a company that stresses quality over quantity. At the same time, Microsoft had jacked up the bidding price so high that Nintendo would be forced to decline the offer. Employees at Rareware seemed happy with the buyout since Microsoft’s ownership would mean financial stability for the studio. But that financial stability would come at the cost of killing creativity and cancelling projects.