Xbox says the way it dealt with Lionhead Studios was 'one of the biggest missteps' it made

A heroic Fable guy.
(Image credit: Microsoft)

Microsoft has admitted that its handling of the defunct Lionhead Studios was "one of the biggest missteps" the company made. The comments came during a new six-part documentary series called Power On: The Story of Xbox. The sixth episode covers the tumultuous Xbox One launch and the gradual path the company took to prioritise gaming again, aided by its numerous studio acquisitions (thanks, IGN). When looking back at how it initially dealt with acquired studios, head of game creator experiences Sarah Bond said "one of the biggest missteps that we learned from in the past was Lionhead."

Former Xbox Game Studios general manager Shannon Loftis echoed Bond's sentiment. "We had already published Fable 1 and it was a hit. People loved it," she said. "The beauty of that game—it was basically like a moving stained-glass window. People wanted more, so we bought Lionhead, Those were good years.

"The game was great, just everything came together. But after Fable 2, Kinect came along and the Fable-Kinect marriage just never really took. And then Fable: The Journey was a passion project for a lot of people, but I think it deviated pretty significantly from the pillars of what made Fable 1 and 2 so popular."

Lionhead was one of the studios sentenced to Kinect development doom back in the 2010s, along with the likes of Rare. While the latter made it out onto the other side, it ultimately proved to be the former's undoing.

"We acquired Lionhead in 2006, shut it down in 2016," Bond continued. "A couple years later we reflected back on that experience: 'What did we learn? How do we not repeat our same mistakes?'"

Phil Spencer implied that Lionhead's demise shaped the way Xbox viewed its developers. "You acquire a studio for what they're great at now," he said. "And your job is to help accelerate how they do what they do, not them accelerate what you do."

That's probably as close as Spencer will ever come to saying: Yeah, we shouldn't have put them on Kinect or forced them into making a Fable live service game. The latter, Fable Legends, was content-complete and in a live beta when Microsoft decided to close the studio, and never saw release.

Lionhead was a fantastic studio, with the Fable series still cemented as one of my all-time favourites. Its closure was an incredibly sad one, and a developer that many still miss today. It's something that present and former Microsoft figures seem to feel too, with Loftis wrapping her interview by saying "I wish Lionhead were still a viable studio."

Bond said that the "challenges" Microsoft went through with Lionhead "taught us what to do this time," with the company now placing a much bigger focus on letting studios continue doing what they're doing with its 23 different acquisitions.

Mollie Taylor
Features Producer

Mollie spent her early childhood deeply invested in games like Killer Instinct, Toontown and Audition Online, which continue to form the pillars of her personality today. She joined PC Gamer in 2020 as a news writer and now lends her expertise to write a wealth of features, guides and reviews with a dash of chaos. She can often be found causing mischief in Final Fantasy 14, using those experiences to write neat things about her favourite MMO. When she's not staring at her bunny girl she can be found sweating out rhythm games, pretending to be good at fighting games or spending far too much money at her local arcade.