You're absolutely right about that too.
Hey, I said that, not that guy...
Rare released remakes of DKC on the GBA shortly after the buyout, and those remakes sold well. Heck, even Diddy Kong Racing DS sold decent. Rare's audience was Nintendo's audience, and they didn't follow them after the buyout.
Yeah, the very good sales of the GBA DKC remakes show without question how Rare's audience was Nintendo's audience. It is true that Sabre Wulf and It's Mr. Pants didn't exactly sell great, but their mascot titles (DKC particularly, the two GBA Banjo games somewhat less) sold well, and GC/Wii Rare mascot titles would have sold well also. No question at all. And we would surely have gotten a Donkey Kong GC 3d platformer at some point, too (remember that, despite all the criticism, DK64 was Rare's best-selling N64 3d platformer).
After the insane sales of the first two Halo games, and Microsoft getting the easy market of people who play shooters and sports games, the idea of Rare ever succeeding on any Microsoft platform was a pipedream. There's a reason why we got Nuts & Bolts, and why riding around in a car reminded me a lot of GTA and not Banjo. That's also the one of the reasons why you don't see Oddworld published under Microsoft anymore, and why Oddworld Inhabitants are kinda hanging with the indie crowd now.
Yeah, Microsoft tried for a while to appeal to platformer fans, with stuff like some of Rare's games, and some original Xbox games like Blinx and Voodoo Vince, but they gave up on that by the early years of the X360, certainly. I like BK: N&B, really, and don't mind the genre change, but you're likely right about why they did it. I pointed out that GbtG had a similar genre change, and that one didn't work out anywhere near as well... GbtG particularly could have benefited from Rare not leaving Nintendo, I'd say. As for N&B, we'd probably have gotten something quite different instead, but Rare would have made console racing games too (Donkey Kong Racing, etc.), so they might not have needed that platformer/racing/open-world hybrid concept in order to sell racing games.
As for Oddworld, their second Xbox game was a shooter, remember... they gave up on platformers even before leaving Microsoft. Understandable. (At least it was a good shooter, though...)
Another thing I don't think many people know is that during Rare's time under Microsoft (before the restructure/Kinect), Rare worked on a lot of games that never even released. Donkey Kong Racing was a Gamecube game moved to the Xbox as "Sabreman Stampede". That game ultimately had its plugged pulled in the end.
Yeah, Rare could have gotten well back on track in '03-'05, after weak years in '01 and '02, if not for Nintendo selling them to MS (this is effectively what happened)... but instead, it was four weak years, instead of two, followed by effective death sometime after that.
There's also stories about games pitched like Arc Angel, Urchin, Ordinary Joe, and Perfect Dark Core that barely made it past tech demos. My guess is Rare had a lot more freedom being a second party studio with Nintendo. Considering there's quite a list of cancelled games during Rare's time with Microsoft, I doubt they gave much mercy on what Rare pitched to them.
Yeah, it wouldn't surprise me at all if MS wasn't much tougher on which Rare games they approved... some people at Rare wanted to be free of Nintendo, and they got their wish. I imagine a lot of them regretted it later, but by that point it was, sadly, far too late.
Oh, as for Kinect Sports, which was mentioned at some point, that game sold well because it was aimed straight at the Kinect audience, and wasn't a traditional Rare title at all -- because the real Rare had been killed off before its release. I doubt they'll ever be back.