"Nintendo had the ability to continue its exclusive relationship with Rare, but in looking at the company's recent track record, it became clear that its value to the future of Nintendo would be limited," says Peter MacDougall, executive vice president, sales and marketing, Nintendo of America. "In other words, we passed on this opportunity for very good business reasons."

In fiscal year 2001, Rare accounted for only 9.5 percent of total Nintendo software sales worldwide. In fiscal year 2002, that number declined to 1.5 percent.

Nintendo will retain exclusive rights for all original properties and franchises featured in games developed by Rare, including Donkey Kong(R), Diddy Kong(R) and Star Fox(R).

According to MacDougall, game development is, by nature, dynamic. Relationships continually change to meet the needs of both manufacturers and publishers. "The disposition of this investment leaves us in a position to become even more aggressive in expanding our development capacity, both internally and externally. Aside from several partnerships already announced over the past year, we are currently in similar talks with several other prospective partners around the world."

In the past year, Nintendo has added emphasis on games which offer true innovation to video game players, and especially those with appeal to older players. Key current and upcoming NINTENDO GAMECUBE(TM) titles include Eternal Darkness: Sanity's Requiem(TM), Animal Crossing(TM), Metroid(R) Prime, The Legend of Zelda(R) and
Capcom's upcoming Resident Evil series exclusively for NINTENDO GAMECUBE.

"Although we declined the opportunity to continue our exclusive agreement with Rare, this announcement does not diminish our respect for their work or the past contributions they have made to Nintendo," adds MacDougall.