Here's your weekly round-up of the biggest video game news stories from the past seven days, including Microsoft's announcement that Fable Legends has been cancelled and Lionhead Studios is to close, Dead Island 2's resurrection at a UK studio, and The Division's promising early success.

Microsoft has announced it is shutting down legendary UK video game developer Lionhead Studios, and has cancelled development of Xbox One and PC role-playing game Fable Legends. Microsoft also announced the closure of Danish studio Press Play.

After months of uncertainty, Dead Island 2 finally has a new developer with Sumo Digital taking the rotten, fleshy reigns of the melee-focused zombie sequel. Publisher Deep Silver broke the news on 10 March following almost eight months of disquiet around the project after Yager Development was unceremoniously relieved of duties, leaving the game in limbo.

Tom Clancy's The Division has proved an enormous success, selling more copies on its launch day than any game in Ubisoft's history and setting a new single-day company record for digital download sales.

For all the latest video game news follow us on Twitter @IBTGamesUK