Although rumored for weeks, now it's finally official. Microsoft Game Studios (MGS) today announced that it has indeed purchased Peter Molyneux's Lionhead Studios.

Based in Guilford, England, Lionhead was formed in 1997 and has created a number of critically acclaimed games including Black & White and Fable, which recently passed the 2 million copies sold mark collectively on Xbox and Windows—Fable is now the best selling RPG on Xbox.

Working with Microsoft on Fable and Fable: The Lost Chapters gave Lionhead the opportunity to strengthen its relationship with the Redmond giant. Now that Lionhead has officially joined Microsoft, it will immediately start developing new content exclusively for the Xbox 360 and Windows platforms.

"At Microsoft Game Studios we have worked hard to become the best partner for the best creative talent in our industry, and this acquisition underscores our commitment to excellence," said Shane Kim, general manager of Microsoft Game Studios. "Peter Molyneux is one of the few true visionaries in our industry, and his joining us is incredibly important to the future of both interactive entertainment and MGS. Lionhead is a shining example of the innovative and creative talent that has delivered some of the most influential and unique games experiences to date, and I am honored to welcome Peter and the incredible people at Lionhead Studios."

"We could not be more excited about being part of MGS. They have long supported our creative vision, and this teamwork resulted in the hugely successful Fable franchise," said Molyneux, managing director of Lionhead Studios. "This acquisition gives Lionhead the stability and opportunity to focus on creating world-class next-generation titles. We are joining some of the most incredible game creators in the industry, the combined talent of which will truly take next-generation gaming to a new level."

For those concerned that Lionhead's becoming a part of MS will stifle the studio's creativity, Peter Moore insists that's not going to happen. "We are delighted about this. Not least is the fact the Peter Molyneux is probably one of the most accomplished game developers in the world," he told BBC News. "What we were looking for is a developer that can touch the nerve of a gamer. We are not afraid to take a risk. With Peter Molyneux you have someone who is able to push the boundaries."

He added, "We are not going to try to bracket [Lionhead] into churning out a shooter. Peter is willing to take a risk and do things differently. We will support that."

With the acquisition, Lionhead now joins other notable Microsoft Game Studios teams such as Bungie, Ensemble, FASA and Kameo and Perfect Dark developer Rare.