Microsoft Game Studios Acquires Video Game Luminary Pet..

REDMOND, Wash. — April 6, 2006 — Microsoft Game Studios (MGS) today announced it has purchased U.K.-based Lionhead Studios, one of the world’s leading and most innovative video game developers and creators of “Fable®,” the hit Xbox® and Windows® franchise.

Lionhead Studios will immediately begin creating content exclusively for the Xbox 360™ and Microsoft® Windows platforms. The companies previously worked together on the popular role-playing games “Fable” for Xbox and “Fable: The Lost Chapters” for Xbox and Windows, which have collectively surpassed the 2 million global unit sales milestone, making “Fable” the best-selling role-playing franchise on the Xbox platform. “Fable” and “Fable: The Lost Chapters” enable players to make decisions that affect their character’s skills, appearances and morality and the world around them.

“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.”

With today’s announcement, Lionhead Studios becomes the latest member of MGS, joining such prestigious and globally recognized game creators as Bungie Studios, Ensemble Studios, FASA Studio and Rare Ltd. on a team whose charter is to create exclusive entertainment experiences that differentiate Xbox 360 and Windows from other gaming platforms.

About Lionhead Studios Lionhead Studios is based in Guildford, England, and was founded in 1997. The studio’s first game, “Black & White” for PC, was released in 2001, and worldwide sales of it have topped 2 million copies. “Fable” for Xbox and “Fable: The Lost Chapters” for Xbox and Windows have collectively also sold more than 2 million copies worldwide, and the numbers continue to climb, making “Fable” one of the top-selling Xbox titles of all time. “Fable: The Lost Chapters” and two further titles, “Black & White 2” and “The Movies,” were all released in fall 2005. Lionhead was backed by three venture capital funds — IDG Ventures Europe, Add Partners and Ingenious Ventures. For more information about Lionhead Studios, visit http://www.lionhead.com

About Microsoft Game Studios Microsoft Game Studios is a leading worldwide publisher and developer of games for the Xbox and Xbox 360 video game systems, the Windows operating system and online platforms. Comprising a network of top developers, Microsoft Game Studios is committed to creating innovative and diverse games for Windows (http://www.microsoft.com/games), including such franchises as “Age of Empires®,” “Flight Simulator” and “Zoo Tycoon®;” Xbox and Xbox 360 (http://www.xbox.com), including such games as the upcoming “Gears of War” and franchises such as “Halo®,” “Fable,” “Project Gotham Racing®” and “Forza Motorsport™”; and MSN® Games (http://www.games.msn.com), the official games channel for the MSN network and home to such hits as “Bejeweled” and “Hexic®.”

About Microsoft Founded in 1975, Microsoft (Nasdaq “MSFT”) is the worldwide leader in software, services and solutions that help people and businesses realize their full potential.

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Rare Ltd. is a subsidiary of Microsoft Corp.

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