While they might not be forcing Rare to work on Kinect games it definitely looks as though they will not green light any of their other projects. Below is a list of cancelled and non green lit games for the Xbox and Xbox 360:
Originally Posted by Phil Spencer
In terms of force, I know people probably don't believe it when I say this: I don't force Rare to do anything. Like, forcing a studio to do something is a very short-term ambition as the head of studios because, in the end, people will vote with their feet, and they'll just go work somewhere else. And Rare has enjoyed the creative, and, frankly, the hit success of [the] Kinect Sports series; it's been an incredibly successful series for them, and it's been great for the studio.
Ordinary Joe is a cancelled prototype for a new survival horror game, that was in early development for Xbox 360 at Rare LTD, designed by Chris Seavor.
Arc Angel is a cancelled futuristic racing game prototype that was in development in 2003 for the Xbox, by a team lead by Chris Seavor at Rare LTD.
Perfect Dark Core
Rare’s management decided to hand the PD franchise to the developers of Conker, a team led by Chris Seavor. Perfect Dark Core featured a more realistic atmosphere than its precedessors, with Joanna having a different and less feminine behaviour (smoking, flirting).
“Kameo 2″, successor of Kameo: Elements of Power, is a cancelled Xbox 360 title which was in development at British studio Rare Ltd.. Although it was never officially announced, some Kameo 2 animations appeared in a reel of a former Rare employee, as noticed by some Kameo-fans at the neoGaf Forum.
Cascade was an unreleased fantasy Massive Multiplater Online game in production at British software house Rare Ltd. The project started after Perfect Dark Zero by Mark Edmonds and Chris Tilston, it built upon early work from a post-Perfect Dark 64 prototype titled Quest.
Banjo-Karting was a game prototype for Xbox 360, started by Rare Ltd. just before Banjo-Kazooie: Nuts and Bolts was finished in late 2008. The prototype took advantage of classic Banjo-Kazooie characters and built upon the racing parts of Nuts and Bolts.
Urchin was an adventure fantasy / horror game that was in development at Rare Ltd. for Xbox 360. A few pieces of concept art were revealed by Rare artist Ryan Firchau at the “Nordic Game Conference”, held in Malmö in Sweden in May 2008. While details are scarce, it is known that Urchin was in development by the team that was responsible for Conker: Live and Reloaded.
Developed by a team of which many worked on Starfox Adventures or Jet Force Gemini, Sabreman Stampede had evolved from a racer into a full adventure.
SoulCatcher is a cancelled game that was in development by Rare LTD for the Xbox 360. The project was meant to be a prototype for a fantasy action adventure game in first person view, that used the Xbox Vision Camera and a customized proto-wand for motion-controls to attack and do magics.
Banjo-Kazoomie was a prototype for the original Xbox which was started at Rare Ltd. in 2004. Players were able to construct their karts out of different parts, therefore after it was cancelled the concept may have evolved into Banjo-Kazooie: Nuts & Bolts, which was released on Xbox 360 four years later.
Savannah was one of various prototypes in development at Rare Ltd. during 2006/2007. As the project remained in prototype stage and was not greenlit, only few elements were set in stone, but it could have been some sort of nature simulator, more than a realistic Viva Pinata.
The Fast and the Furriest
The Fast & the Furriest is a cancelled party game that was in development in 2006 by Rare for the Xbox 360 Xbox Live Arcade digital service. Other than the normal joypad, the game could have been played with the Xbox Live Vision camera, to track players’ movements in a similar way to the PS2 EYE Toy or Microsoft’s own Kinect. The Fast & the Furriest would have included many different mini-games, as 100 meter dash, bungee run, hurdles and tip-tup curling.
Above are the most document cancelled games. Through former employees twitter accounts and interviews we also now about a few games that are just known by their initials:
Quest was a cancelled Massive Multiplayer Online (MMO) game that was in development at Rare Ltd.
BW - was realistic (at least futuristic realistic)
CD2 - most likely Crackdown 2
So that is almost 20 canned games that we publically know about. Who knows how many other games one of the Rare teams worked on that never saw the light of day. All this to say it is a shame that a lot of these games are not being explored by Microsoft.