Microsoft is to close Lionhead, the UK game development studio behind fantasy game Fable, and the Danish studio Press Play.
Ironically, up to a year ago, Fable Legends was tipped to be the hero games title for gaming on Windows 10, with cross-platform support for console and mobile players.
The closure of the popular studio is a crushing blow for the UK games industry.
Lionhead was founded by Peter Molyneux in 1996. A decade later it was acquired by Microsoft.
While Molyneux left to found independent studio 22 Cans in 2012, work began in earnest on Fable Legends, but the release date had been shelved several times.
Now, all development of the game has been halted.
UK employment law dictates that Microsoft must begin a formal discussion with employees before the studio can be shut.
Danish Studio Press Play was founded in 2006 and is best known for its adventure game Max: The Curse of Brotherhood, as well as puzzle game Kalimba.
Microsoft also said it will sunset development on Project Knoxville, a survival game being developed by Press Play.
“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,” said Hanno Lemke, the general manager of Microsoft Studios Europe.
“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,” Lemke said.