Project Dream

During most of its development period, Project Dream was a role-playing video game (RPG) that focused on a boy named Edson and his pets Dinger the dog and Billy the parrot. In its story, a band of pirates led by Captain Blackeye searched for "floaty", a substance that would allow their ships to fly. Edson got into trouble with the pirates and set off on a journey with his girlfriend to escape them. The Super Nintendo Entertainment System (SNES) version used an isometric perspective and had a fairy tale theme.

Edson used a wooden sword to fight trolls and Dinger performed actions to assist him, such as going ahead and digging holes to find items. Occasionally, a dinosaur would appear and attempt to crush Edson by stepping on him; falling leaves and the virtual camera system shaking warned the player when it was approaching.

After Nintendo released the SNES, Rare used the profits they made from Nintendo Entertainment System games to invest in Silicon Graphics workstations. Rare used this high-end technology to develop Donkey Kong Country (1994), which was a critical and commercial success, becoming the second best-selling SNES game behind Super Mario World (1990). After finishing Donkey Kong Country, Rare staff decided to apply the technology to a new game that was not a platformer. They settled on developing an RPG, as they were all fans of the genre.

The codename Dream was chosen because they wanted their RPG to have a fantastical, magical feel. Dream used Donkey Kong Country's graphics technology to an advanced level. It was inspired by Japanese RPGs and LucasArts adventure games; the team wanted to combine those games to create one with a "Rare flavour". Dream was developed by Rare's Donkey Kong Country 2: Diddy's Kong Quest (1995) team and was announced in 1995.

When Dream staff saw Nintendo's Super Mario 64 (1996), they realized it was going to set the standard for 3D games and ruin their project. They scrapped their work on Dream and began developing a new game inspired by Super Mario 64. Banjo was kept because the team liked the character. The fantasy theme was restored, and within another 16 months, Rare had finished Banjo-Kazooie.

The game was released in 1998 and was a commercial success, topping the United Kingdom all-format charts—a feat a Rare game would not accomplish again until its 30th anniversary game Rare Replay in 2015—and attracted critical acclaim. The antagonist of Dream, Captain Blackeye, has cameo appearances in Banjo-Kazooie and its sequel Banjo-Tooie (2000); in Tooie, he gripes about how a bear stole his glory, referencing the development of Dream. Numerous assets from Dream were also reused in Banjo-Kazooie. Dream's pirate theme was eventually recycled in Rare's 2018 game Sea of Thieves.