Born in 1960, Peter Molyneux had early experiences with the Amiga. With somewhat enterpreterneurial spirit, he founded games company Bullfrog with Les Edgar in Guildford. He was producer or designer on every game, including the incredibly successful Populous (4 million copies sold) and Dungeon Keeper.

As Bullfrog became more successful, it also became more business-orientated in nature. Two years after selling the company to EA, he left Bullfrog to found Lionhead Studios with Mark Hedley (a main figure behind Theme Hospital). Steve Jackson, co-founder of Games Workshop, and Tim Rance, a respected Systems Analyst, also joined on as directors.

Starting small, a hand-picked team of around 30 people were soon brought together to work on Black & White from 1998 onwards, a novel god-game. B&W attracted a large fanbase even before release, and a lot of hype was generated. With several delays, it was finished just in time to make the Valentine’s day deadline EA had set. Released in March 2001, it attracted a huge mix of reviews, some of which were utterly dismissive, some lauding it as a stroke of brilliance. While successful initially, it has proved to be a huge ’sleeper’ hit - selling hundreds of thousands of copies long after launch. At least two million copies were sold.

The resulting cash flow put Molyneux in an interesting position. A city insider suggested that Lionhead would be valuated at around half a cool £1 000 000 000, if floated (sold as shares) on the stock market. To this end, Lionhead started working to satisfy the financial types in the city, which most significantly included hugely increased the size of the teams working on each game - which at that point included Fable, B&W2 and The Movies. Molyneux himself says that he lost focus on the games.

48 hours before the final meeting to float LH there was a stock market crash. The various bankers backing the project pulled out - “the luckiest thing of our [Molyneux and Webley's] lives happened.” A fast turn-around was needed, to change the business model, and The Movies was signed to Activision.

Cash was still burning at rates of up to £1.5 million a month, and the money just wasn’t there anymore. That’s why in July 2004 several Venture Capitalists started bankrolling the company. The various finance issues were arguably very influential not only on the company but also the way the games were being produced. The corporate culture some say Molyneux was trying to escape from at Bullfrog had taken seat in Lionhead.

After several years of development, Fable was released in August 2004. Reviews were mixed again, but the audience was highly receptive and it became the fastest-selling X Box game, with in excess of 1.5 million copies sold. The game was reviewed well, although it was again noted that it suffered from hype on Molyneux’s side.

The various Lionhead teams, meanwhile, were stretched to the utter limit trying to finish B&W2 and The Movies as well as making the expansion Fable: The Lost Chapters. The aim was to release them in time for Christmas 2005. In the rush, the original Lionhead concept, of a small, select group of developers working on innovative projects, had completely gone.

Neither B&W2 nor The Movies got the acclaim Lionhead hoped for or the commercial success it wanted. While B&W2 seems to have flopped, The Movies has done relatively well yet has not been the runaway seller expected - it was forecast to be about as successful as the Sims, and its actual sales performance was accredited due to low market awareness. Some analysts feel that, had Activision pushed it onto the audience more, it could have been a fantastic success, especially with the word-of-mouth positive feedback even a medium-sized enthusiastic userbase can give.

Partly to facilitate a change in strategy and partly to get some management functions off his hands, Molyneux started serious acquisition talks with some major publishing houses, Ubisoft rumoured to be among them. As a part of the restructuring, around 70 people were let go in the spring, to cut down the general staff size and focus each of the new two teams on their game. A group of about 100 was left.

In the end, Microsoft Game Studios took over Lionhead, though it retains a large degree of independence, presumably because of the success the two had together with Fable. While Microsoft now has ultra-executive control, it is speculated that the various Intellectual Properties the games represent have not been signed over, and it frees up Molyneux to keep more in touch with the games he produces again.

In March ‘07, Lionhead has begun hiring again. The Fable 2 team of about 75 is to be expanded considerably (although with a lot of fixed-term contracts), with some jobs advertised for Fable 2 and some not specified. Work continues on two games, and Lionhead seem to have a free hand on how and when they’re done.