I don't know how I feel about people forever thinking Banjo is a Nintendo franchise to be the reason Banjo won't come back.
He probably should’ve worded it better. But I’m pretty sure he’s trying to say that the main reason there hasn’t been any new projects for Banjo & Kazzoie from Microsoft is because Banjo’s main audience and appeal are with Nintendo and fits their image better than Microsoft’s. Although Microsoft was quick enough to get their rights to Rare’s property, they weren’t quick enough to help cement Banjo & Kazooie with their audience and by the time they did try with Nuts & Bolts, it was too late (at least mostly for them).
Microsoft during the late Xbox/Xbox 360 was known to be for a more mature audience, with shooters and more realistic games being extremely popular, online multiplayer, and their motto even today, is to provide the most powerful graphics on the market for consoles. There’s a reason why the late 2000’s to early 2010’s was considered to be the gritty era, which was also the time Banjo & Kazzoie for the Xbox 360 was being developed and seemed to contrast that by being a more jolly platformer.
It was probably the reason they Nuts and Bolts became a Racing/Shooter game when it was released. The way Banjo was initially announced as a game that would be reminiscent of the originals on N64 seemed to be what the developers had in mind when the project started, but as they were developing the game, the higher ups at either Microsoft or Rare thought that the Xbox’s market would be too alienating for a traditional Banjo and Kazzoie title and shifted their focus to help “fit” with Xbox’s current market. This is pretty evident in not only remnants of their work such as the environments and how despite their large size are barren, but also how the game
literally makes jabs at how “kids just want to shoot stuff these days” and how they need to “broaden their demographic”. L.O.G at the beginning sort of personifies the higher ups beliefs that Banjo and Kazooie wouldn’t sell well or be as big on their platform because of Xbox’s marketing and appeal at the time.
And it’s also why they most likely didn’t proceed with another game since. Nuts and Bolts was received as okay by most people, most of Rare’s main team behind many of their hit games during Rare’s Golden era have already left by that point, other attempts at testing the platform genre haven’t lived up to expectations, and Banjo’s main audience mostly on Nintendo consoles. Microsoft most likely isn’t sure if Banjo Kazzoie would really succeed on Xbox. There is an outlier, with Minecraft, as similar to Rare, Mojang was bought by them, but unlike previously, they learned from their mistakes and pushed it as much as they could when the game was it’s peak of it’s popularity (which as accompanied by the fact that they paid 3.5 billion for it), and Microsoft and Minecraft have been considered to be synonymous with eachother.
There actually may be a chance for them to come back, and not as a spin off ordeal like last time. With rumors of Xbox Live (and Game Pass?) being available on Nintendo Switch later on, Xbox has slowly been trying to bridge the Nintendo player base with Xbox over the past couple of years. And if it goes as far as having some exclusive titles come over (as it may be the case), the closer they may be willing to give Banjo and Kazzoie another shot, but with Nintendo at their side this time.
Of course this is my speculation so take it with a grain of salt.
