Microsoft cancels Fable Legends and proposes closing Lionhead Studios (update)

Microsoft has delivered some unexpected bad news today.

The game publisher and hardware maker announced today that it is canceling Fable Legends, the next installment in the fantasy series that has been an Xbox staple since its debut in 2004. Microsoft also said that it has proposed completely closing Fable developer Lionhead Studios. This could mark the end of one of the most iconic developers in the $99.3 billion global game industry (based on market researcher Newzoo’s estimates).

Lionhead’s community manager was assuring fans on Fable Legends’ message board that the game was coming just earlier today.

Microsoft also announced that it is closing Press Play Studios, which developed games Max: The Curse of Brotherhood and Kalimba. It was working on Project Knoxville, a multiplayer survival game.

“These have been tough decisions and we have not made them lightly, nor are they a reflection on these development teams — we are incredibly fortunate to have the talent, creativity and commitment of the people at these studios,” Microsoft Studios Europe general manager Hanno Lemke noted. “The Lionhead Studios team has delighted millions of fans with the Fable series over the past decade. Press Play imbued the industry with a unique creative spirit behind games like Max: The Curse of Brotherhood and Kalimba, which both captured passionate fans. These changes are taking effect as Microsoft Studios continues to focus its investment and development on the games and franchises that fans find most exciting and want to play.”

Fable Legends, which was announced in 2013, seemed to be far in development. It was a multiplayer-focused take on the series. An open beta for the free-to-play game was supposed to come out this spring. Fable Legends was in a closed beta.

Lionhead revealed on its site that it will refund players who spent money on the closed beta, which won’t go offline until April 13.

Lionhead Studios is one of the more stories studios in video games. One of its major creative forces was Peter Molyneux, who left the company in 2012 to start his own studio, 22Cans. Molyneux helped bring about the god-game genre (where the player helps guide the development of an entire world) with Populous, and he took that experience to Lionhead, whose first game was the god-simulator Black and White in 2001. Microsoft has closed notable studios before, including Ensemble, which created the real-time strategy series Age of Empires and the first Halo Wars.

This is a lot of bad news coming out of Microsoft, whose Xbox One console has trailed its chief competitor, the PlayStation 4, in sales. We don’t know exactly what Microsoft means when it says that it wants to “focus its investment and development on the games and franchises that fans find most exciting and want to play” or how exactly that resulted in Fable Legends’ cancellation, a game that Microsoft has often displayed at industry events like the Electronic Entertainment Expo. While it was never as big as a Halo or Gears of War, Fable was nonetheless a recognizable console exclusive franchise for Xbox.

Updated at 12:23 with news about refunds and the closed beta’s end date.