Yep, you read right, First Party. Here's the full story.
Numerous sources are confirming that Nintendo and long-time second party developer Rare are finally parting ways. This month's Star Fox Adventures is reported to be the last game from the company to see release on a Nintendo console.
Rare has yet to release a Gamecube game despite receiving some of the system's first development kits. Nintendo spokesman Yasuhiro Minagawa told Bloomberg today that losing the British developer would have "little impact for us," while Microsoft remained silent on the deal.
The split has been apparent for some time, with any mention of Rare projects outside SFA being completely absent for months, including at this past E3. With details of the deal still to be confirmed, a public announcement has been put on hold.
Though an accomplished developer since before the days of the NES, Rareware became stars with 1994's Donkey Kong Country. The Super Nintendo classic, one of the first games to completely feature prerendered graphics, represented what has become a trend for Nintendo - farming out franchises to outside talent.
Three years later, Rare took another dormant license and matched it with another classic game. James Bond returned in the 1997 blockbuster GoldenEye 007, which sold nearly 5 million copies in the U.S. alone and fully realized the idea of a complex first-person shooter on consoles.
But that was Rare's last smash. Despite being seen in the industry as a shining light of support for the Nintendo 64, critical acclaim would not translate into sales success for Rare's own franchises. The most notable examples were Conker's Bad Fur Day and the unofficial follow-up to GoldenEye, Perfect Dark.
The price for the Bond license increased exponentially after the success of GoldenEye, and the choice to not renew it led to the creation of Perfect Dark. The game was well-received by the press and sold nearly 600,000 copies, a healthy number for most games but a large disappointment in comparison.
Far more disappointing were the sales of Conker's Bad Fur Day, a raunchy and revolutionary platformer that began life as a cute Super Mario 64 clone and was in development for over four years. Conker the foul-mouthed squirrel was promoted heavily, including a close relationship with Playboy, but the high concept of cartoon debauchery failed at retail with a meager 200,000 copies sold.
Second parties have gradually become less a part of Nintendo's business plan as the company built relationships with powerhouses such as Capcom, Namco and Sega. These companies are working on Zelda, Starfox, and F-Zero games respectively.
With the return on Rare's games diminishing and development cycles steadily increasing in length, Nintendo turned down multiple chances to extend their 49% stake in Rare to full ownership over the past year. This led to rumors of a sale to Activision, and later the arrangement with Microsoft.
Nintendo owns the Banjo-Kazooie and Diddy Kong universes, which include Conker the squirrel, who quietly debuted as his originally cute self in Diddy Kong Racing in November of 1997.
The fate of confirmed Rare projects with Nintendo licenses, such as Donkey Kong Racing for the Gamecube, remains undetermined, as does the future of Rare-created content published by Nintendo such as Perfect Dark. The company's Game Boy Advance projects appear to be unaffected by the deal.
An official announcement is expected shortly, and Microsoft is set to debut Rare as a first-party developer at their X02 Europe event in Spain on the 24th of this month.
Source:
Gameforms
It's official, Rare is now a Micorsoft First Party developer
I'm gonna buy an Xbox next year anyway...and without Nintendo supervising I have my doubts that their games will be as good as before.
Oh well. I hope I'll be getting an XBox, but i doubt that will happen anytime soon. 
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