Nintendo Cuts Development Ties with Rare, Ltd.

Decision Reflects Strategic Move To Expand And Redirect Game Development

As part of a strategic redirection of itsgame development investments, Nintendo announces it has sold its 49percent ownership position in U.K.-based developer Rare, Ltd.

“Nintendo had the ability to continue its exclusive relationshipwith Rare, but in looking at the company’s recent track record, itbecame clear that its value to the future of Nintendo would belimited,” says Peter MacDougall, executive vice president, sales andmarketing, Nintendo of America. “In other words, we passed on thisopportunity for very good business reasons.”

In fiscal year 2001, Rare accounted for only 9.5 percent of totalNintendo software sales worldwide. In fiscal year 2002, that numberdeclined to 1.5 percent.

Nintendo will retain exclusive rights for all original propertiesand franchises featured in games developed by Rare, including DonkeyKong(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 bothmanufacturers and publishers. “The disposition of this investmentleaves us in a position to become even more aggressive in expandingour development capacity, both internally and externally. Aside fromseveral partnerships already announced over the past year, we arecurrently in similar talks with several other prospective partnersaround the world.”

In the past year, Nintendo has added emphasis on games which offertrue innovation to video game players, and especially those withappeal to older players. Key current and upcoming NINTENDOGAMECUBE(TM) titles include Eternal Darkness: Sanity’s Requiem(TM),Animal Crossing(TM), Metroid(R) Prime, The Legend of Zelda(R) andCapcom’s upcoming Resident Evil series exclusively for NINTENDOGAMECUBE.

“Although we declined the opportunity to continue our exclusiveagreement with Rare, this announcement does not diminish our respectfor their work or the past contributions they have made to Nintendo,”adds MacDougall.

As the worldwide leader and innovator in the creation ofinteractive entertainment, Nintendo Co. Ltd., of Kyoto, Japan,manufactures and markets hardware and software for its popular homevideo game systems. The systems include Game Boy(R), Nintendo(R) 64,Game Boy Advance and NINTENDO GAMECUBE. Since the release of its firsthome video game system in 1983, Nintendo has sold more than 1.6billion video games worldwide, creating enduring industry icons suchas Mario(TM) and Donkey Kong(R) and launching such franchises asZelda(TM) and Pokemon(R). As a wholly owned subsidiary, Nintendo ofAmerica Inc., based in Redmond, Wash., serves as headquarters forNintendo’s operations in the Western Hemisphere.