Microsoft acquires Rare for $375 million

25 September 2002 UK computer games specialist Rare has been acquired by software giant Microsoft for $375 million (€383.3m) in cash, bucking the investment slump in the European technology sector. The deal highlights Microsoft’s commitment to expanding the range of games it offers for its Xbox games console, despite slower than expected sales.

Microsoft’s purchase was made possible after computer games giant Nintendo sold its 49% share of Rare last week.

Rare was co-founded in 1985 by the Stamper brothers Chris and Tim, as well as Joel Hochberg, now the company’s president. Since then, Rare has sold more than 90 million copies of its games.

The company used to be one of Nintendo’s most important developers of games. In its 2001 financial year, 9.5% of Nintendo’s total revenues came from sales of Rare’s games, but this figure dropped to 1.5% in 2002. Nintendo will retain the rights to sell certain games from Rare.

Microsoft said that Rare would begin developing exclusive console games for Xbox from today.

The purchase represents an opportunity for Microsoft to revive sluggish sales of its Xbox. Initially, Microsoft forecast Xbox sales of between 4.5 million and 6 million for 2002, but the company has now said it expects to sell around 3.5 million.

Rare is the biggest acquisition Microsoft’s Xbox division has made to date. Microsoft’s main competitors are Sony’s PlayStation 2 and Nintendo’s GameCube.

The deal certainly pleased Ed Fries, vice president of Xbox Game Content at Microsoft. He said, “The last time I was this excited was the first time I picked up a controller and played a game from Rare.”

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Ben Rossi

Ben was Vitesse Media's editorial director, leading content creation and editorial strategy across all Vitesse products, including its market-leading B2B and consumer magazines, websites, research and...

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