The following information is based on my insider knowledge regarding the development behind Diddy Kong Racing 2.

For the longest time, Nintendo has been trying to figure out how to create a sequel for Diddy Kong Racing. Unfortunately, the development of the project has constantly struggled due to bad luck, limited resources, and awkward timing.

In 2006, Monster Games was finishing up development on Excitetruck (Wii), and Nintendo asked the studio if they would be interested in attempting a sequel to the N64 classic, “Diddy Kong Racing”. Nintendo expressed plans to completely reboot Diddy Kong Racing for a new generation of kids, and who can really blame them? Diddy Kong Racing sold over 5 million copies on the Nintendo 64.

At this point, Nintendo was impressed with what Monster Games had accomplished with Nintendo’s “Excite” franchise, and they wanted to give Monster Games the keys to another popular racing franchise. Around this time, the sales for Donkey Kong’s games (Donkey Konga, Jungle Beat, etc) were below Nintendo’s expectations. Donkey Kong’s declining sales during GameCube and Game Boy Advance is part of why Nintendo decided to reboot Diddy Kong Racing.

The plan was simple: Rareware would handle the Nintendo DS port of Diddy Kong Racing while Monster Games would work on a completely new sequel (for Wii).

Monster Games began planning out a traditional sequel to Diddy Kong Racing. Representatives from Nintendo suggested that Diddy Kong Racing 2 should be as different from the Mario Kart series as possible. Nintendo believed that the Diddy Kong Racing series couldn’t co-exist in the marketplace with Mario Kart unless it offered a completely different, unique experience.

This lead to a solution. Riding animals was a large focus in the Donkey Kong Country series. Monster Games brainstormed the idea of having vehicles that could transform into animals from Donkey Kong Country. Each vehicle would have special abilities based on whatever animal it was represented by.

As reported on NeoGaf in 2008, Monster Games began a top secret project in 2006 after finishing Excitetruck.

Right now, the 20 employees at Monster Games are working on a top-secret video game for Nintendo. They’ve worked on it for two years and are nearly finished. The process is so private the designers must darken their monitors when the bottled-water deliveryman enters the office. The project was started in December 2006, so it should be revealed soon.

Three things in 2007 caused the cancellation of the Diddy Kong Racing sequel for Wii.

1) The low sales and poor reviews of 2007’s Donkey Kong: Barrel Blast. This was a racing game based on the Donkey Kong license.

2) Sales for 2007’s Diddy Kong Racing DS did not live up to Nintendo’s expectations. Although the game would sell over 1 million units worldwide, it was a huge drop from the 4-5 million that Diddy Kong Racing sold on the Nintendo 64.

3) In 2007, Nintendo had negotiations with Microsoft to acquire/purchase some of the characters from the original game (including Timber, Pipsy, and Taj the Genie). Microsoft was asking for more money than Nintendo was willing to pay. This was the same year that Nintendo prevented Microsoft from putting Goldeneye 007 on Xbox Live Arcade.

After multiple meetings with Nintendo, Monster Games removed the Diddy Kong Racing license from the prototype, but they remained persistent about designing a game around these animal themed vehicles. Nintendo suggested that Monster Games should return to the “Excite” series.

Excitebots (Wii) would be designed around the animal themed vehicles from the Diddy Kong Racing 2 (Wii) prototype. For example, one of the vehicles in Diddy Kong Racing 2 was based on Winky the Frog from Donkey Kong Country. This frog vehicle from DK Racing 2 would later re-appear in “Excitebots” for the Wii. After ditching the Donkey Kong license, Monster Games changed the vehicle designs to make them look less like the animal buddies from the Donkey Kong Country series.

Sales for Excitebot were disappointing to say the least, but Nintendo still had faith in the talent and capabilities of Monster Games. Executives from Nintendo were impressed by Monster’s Diddy Kong Racing 2 prototype which featured a character flying through lava rings in a bird-like vehicle. Based on the prototype, the executives asked Monster Games to work on a sequel to Pilotwings, and Monster agreed to the idea.

Two things would renew Nintendo’s interest in a Diddy Kong Racing sequel.

1) 2008’s Mario Kart Wii would sell over 35 million units worldwide.

2) 2010’s Donkey Kong Country Returns would sell over 6 million units worldwide. The game sold more than any Zelda or Metroid game for Wii.

Development on Diddy Kong Racing 2 would start up again as Monster Games was getting ready to release Pilotwings Resort. But this time, both Retro Studios and Monster Games would collaborate on the project, and it would get moved from Wii to Project Cafe (aka Wii U).

Monster Games and Retro Studios would soon form a bond over the Donkey Kong intellectual property. Retro Studios, who had been successful with the Donkey Kong IP, was tasked with assisting Monster Games on Diddy Kong Racing 2. Retro’s contributions to Monster’s Diddy Kong Racing project is why Nintendo asked Retro to assist with Mario Kart 7’s development.

Monster Games ported Retro’s Donkey Kong Country Returns to the 3DS. Monster Games is also credited for assisting Retro Studios on the development of Donkey Kong Country: Tropical Freeze for Wii U. It is no coincidence that Monster Games has worked on TWO Donkey Kong projects in a row. Many of the art assets from Tropical Freeze were used during the development of Diddy Kong Racing 2.

Diddy Kong Racing 2 for Wii U combines the animal vehicle ideas of Excitebots with the hub world single player adventure of the original Diddy Kong Racing. The game will feature both local and online multiplayer, as well as using your GamePad screen to find collectable balloons on the map.

Kensuke Tanabe, the producer of Donkey Kong Country Returns and Tropical Freeze, pitched the idea of Dillon (from Dillon’s Rolling Western) to be one of the racers in the game. Tanabe was the producer of Dillon’s Rolling Western, and he liked the idea of having a roster of lesser known Nintendo characters.

Before Diddy Kong Racing, Diddy Kong had always seemed like a sidekick more than a star. Tanabe thought that the concept of lesser known Nintendo characters “fighting to be Nintendo’s big star” could prove to be interesting for Diddy Kong Racing. Characters such as Mallo (Pushmo) and Rusty (Rusty’s Real Deal Baseball) were also added as racers to fill out the roster.

Nintendo purposely held off from showing Diddy Kong Racing 2 at E3 this year to avoid sabotaging the excitement around Mario Kart 8. It sounds like Diddy Kong Racing 2 will be revealed sometime in 2015, and released that same year.

Diddy Kong Racing 2 is a collaboration between Monster Games and Retro Studios with Kensuke Tanabe as the producer. Monster Games is also working on another side (small) project that isn’t related to Diddy Kong Racing 2. Retro Studios is working on a separate main project of their own as well.

There was a 2012 rumor at Complex.com that Nintendo was in discussions with Rare/Microsoft about Banjo-Kazooie. Nintendo was in talks with Microsoft in 2012, but it was not over Banjo-Kazooie. From what I’ve heard, it was over some of the rights issues regarding Diddy Kong Racing. Three months after the Rare rumor, another rumor surfaced in December 2012 about Diddy Kong Racing being developed by Monster Games.

I’ll leave you with one final thought: Ask yourself why Diddy Kong was playable in Mario Kart: Double Dash and Mario Kart Wii, but not in Mario Kart 3DS or Mario Kart 8 for Wii U.