Microsoft has just announced that the long-in-development Fable Legends is canceled, and furthermore that it is “in discussions with employees” about closing down Lionhead. That's not the end to the bad news, either. Press Play Studios, which had been working on the Xbox One-exclusive Project Knoxville, will also be shut down.

“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 wrote on the Xbox Wire. “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.”

Reasons for the cancellation of Fable Legends, which was touted for cross-platform play between the PC and the Xbox One, haven't been given, but the game was conspicuous by its absence at Microsoft's "Spring Preview" event a fortnight ago. Despite the "in discussions" wording of the statement, the closure of Lionhead seems certain because you don't announce this sort of thing unless it's going to happen.

Nonetheless, Lemke reiterated Microsoft's continuing support for studios in the UK and Europe, as well as for “new IP and originality in the games we offer on our platforms.” The number of affected employees also wasn't revealed, but Lemke said the company would make efforts to help them find new jobs, with Microsoft or elsewhere. The decisions seems to have been unexpected as far as the Fable team were concerned, who were still actively promoting the games beta.

I received an e-mail about the Fable Legends beta just days ago. Must be a very sudden cancellation. pic.twitter.com/FlHWh0ZOM0March 7, 2016

We'll update with more background as we hear it. Best of luck to all those affected at Lionhead and Press Play.