There's a great anecdote in Eurogamer's in-depth report on the creation, evolution and demise of Lionhead, told by Fable Art Director John McCormack, that really nails the essence of Peter Molyneux. “We had a meeting," McCormack said. "We'd not seen [Molyneux] in weeks because he had other things on. He opened the door, walked in and goes, the hero has a dog, and it dies. And then he left and we didn't see him again for another month. We were like, what the fuck? That was it. That was the direction.”
Through that story, and many others, Lionhead sounds like a simultaneously fantastic and nightmarish place to work, at least in the early days, and for those who fit into its almost cliched “boys' club” atmosphere. Yet despite the tales of inappropriate-for-the-workplace behavior, it was also a forcefully progressive studio: Complaints about the inclusion of gay and black characters in the original Fable, for instance, led the studio to push for even more in the sequel.
Microsoft didn't see things in quite the same light, however. “They were going, you can't have a black person on the cover, and you can't have a woman. And you want a black woman. And I was like, yes, I do, because it's about 'be whatever hero you want',” McCormack said. “No. It's a white guy. That's just the way it is. We know what sells and that's fucking it. Stop the arguing. I was like, fuck you! That was a huge fight.”
Of course, the ending is inevitably unhappy: Lionhead wanted to do a full-on Fable 4, something akin to Mass Effect or Skyrim, but Microsoft was invested in the games-as-service model, so that idea was rejected in favor of the free-to-play Fable Legends. But according to one source, it soaked up an astronomical $75 million before it was canceled; and while there was, as reported, an effort to save the project and release it under the banner of a new, indie studio, there simply wasn't enough time to pull it all together.
By any measure, it's an impressively researched and candid report (“I love Peter, but he's a dick,” one Lionhead veteran says, and Molyneux doesn't disagree, admitting, “I'm a complete twat”) and well worth a full read. Catch the whole thing at Eurogamer.