Well MS clearly bought rare all those years ago hoping it would keep laying golden eggs like it had for nintendo.
Think back on their output for the N64 years -
1996- KI gold
1997- Blast Corps, Golden Eye, Diddy Kong Racing
1998- Banjo Kazooie
1999- Jet Force Gemini , DK64
2000- Perfect Dark, Banjo Tooie, Mickeys speedway USA
2001- Conkers Bad Fur Day
Around this time a bunch of people left forming free radical, the guys who made time splitters. Outside of Conkers Bad Fur Day and possibly Jet Force Gemini , all of the above games were multimillion sellers. This also doesn't mention the 2 dozen or so other games Rare made , mostly donkey kong country and donkey kong land, while working with nintendo.
So the Rare which microsoft invested fully into was missing many of the people responsible for both goldeneye and perfect dark and it now didn't have access to any of Nintendos own IP's obviously. I'm sure the intent, initially was that rare could pump out 2-3 games a year that would hopefully attract the family audience to the xbox. The original xbox was pretty much popular among college aged men and little else. Unfortunately I think Nintendo got rid of rare because they saw something changing with their output , in 2000-2002 their output vastly decreased and I think Nintendo just wanted an out. MS bought in , expecting the late 90's rare but they got lemon. At the time of transfer only 4 games were being worked on - Grabbed by the Ghoulies, Kameo, Perfect Dark Zero and that early prototype banjo racing game. Ghoulies got shoved out the door and wasn't that great and the other 3 games got bumped to 360. To make up for that gap, a single game was built- Conker Live and Reloaded but it too, failed to set the sales world on fire.
Pre Kinect then, Rares output consisted of the aforementioned Perfect Dark Zero and Kameo , both 360 launch games and eventually that Banjo's nuts and bolts title. In the meantime, Microsoft attempted to again ape nintendo with a brand launch rivaling pokemon. Spending a shit ton of money on viva pinata as a game , show, comic, etc. There was even an expansion/sequel released but all in all not enough to make up for that initial investment. At this point, I'm sure you have Rare trying to start up a ton of products that might appeal to the existing audience but instead they get forced to spend a ton of time being MS' version of Nintendo once again. Making xbox live avatars that are just Mii knockoffs, creating kinect sports 1,2 and just generally doing nothing their previous fan base might have liked. It's now been so long that , outside of Killer Instinct I doubt ANY of Rares previous IP's have any staying power. But , thanks to kinect sales + crappy casual motion games I think MS may have finally broken even on that investment.