A hot rumor going around GDC turns out to have been true, as Microsoft has officially announced it has purchased Fable developer Lionhead Studios.

“At Microsoft Game Studios we have worked hard to become the best partner for the best creative talent in our industry, and this acquisition underscores our commitment to excellence,” said Shane Kim, general manager of Microsoft Game Studios. “Peter Molyneux is one of the few true visionaries in our industry, and his joining us is incredibly important to the future of both interactive entertainment and MGS. Lionhead is a shining example of the innovative and creative talent that has delivered some of the most influential and unique games experiences to date, and I am honored to welcome Peter and the incredible people at Lionhead Studios.”

Gamasutra suggests that the move may have been partially spurred by Molyneux's favorable comments on the Revolution, suggesting he may have had interest in developing for the system. Personally, I don't see why Microsoft would be so concerned with snapping him up all to themselves.

Molyneux is a famous face, and Fable was a strong seller on the Xbox, but beyond that his performance is less than stellar. The Black and White series is a favorite for gamers to complain about, and sales of The Movies were weak. Fable actually wasn't very good either, but it also happened to the only thing even close to a semi-decent RPG on the Xbox. I don't know that Microsoft would lose all that much by allowing him to develop on other systems. If they were that concerned about it, they could have just paid for an exclusivity contract for the Fable series.

For his part, Molyneux had this to say about the acquisition:

"The environment for independent developers has become very challenging," Molyneux conceded. "The amount of money needed or required to develop a game is absolutely phenomenal. It's often very difficult to persuade publishers to invest when they have internal resources."

He added, "We had other options than Microsoft, but they are the perfect partner for us. We share the same vision about the future of games."

Source: Gamasutra