What is? I think it's been obvious for sometime now personally.

Fable 3 didn't sell more than 5M on 360. By his own admission the 360 has been an artistic failure for him or he's been an artistic failure for MS. Either way, for someone with as big an ego as Petey, that's gotta hurt.

No, so wrong. 

You are in denial or have not read up on this, or both.

Here is the article you need to read. http://www.eurogamer.net/articles/2012-02-08-who-killed-rare

There seem to have been two major factors, the lack of the special creative partnership Rare had with Nintendo:  
 

However, in time it became clear that everyone had underestimated how much of the studio's success was down to Nintendo's gentle steering. "It seemed like Microsoft was really a novice in the games industry and for some time they left us to try and see how things worked," Cook explains. "They wanted hit games for their console and since they weren't sure how to go about it they trusted Rare to do what was necessary. The problem here was that Rare was a very long way from the very corporate structure of Microsoft and when Rare had made games it wasn't in isolation from Nintendo but as a creative partnership. 

And Microsoft's corporate changes to the company, which were really a necessity for the expanding size of Rare, the games they were making, and the games market as a whole:  

"The changes were imperceptible at first, but became increasingly rapid as time went on," says Phil Tossell. Hired by Hollis in 1997, he cut his teeth on Diddy Kong Racing before working as lead engineer on Dinosaur Planet (which later became Starfox Adventures). He was present at the company through the Microsoft acquisition, and was promoted to Director of Gameplay in 2009 when he oversaw development of Kinect Sports. "For me personally, the atmosphere became much more stifling and a lot more stressful," he says. "There was an overall feeling that you weren't really in control of what you were doing and that you weren't really trusted either.  

Shocking news but good. Molyneux always was crazy overrated and I never liked any of his games and I don't think MS needs him. Also to have Lionhead disolve like this might send signals to MS that going too casual is a bad strategy. 

..sigh,another people said i didn't read it

i guess you should read again,thanks

I guess I was too inactive on the forums to observe.

so what will happen to lionhead now ?? mostly all key staff are gone and their only Mark Webley remains the other co founder of lionhead