Sitting in perfectly angled leather chairs, legs folded comfortably, we discussed the pacing and production of Fable II, what Lionhead is up to next, and whether he believes video games will ever reach a truly wide audience.

Peter Molyneux: Have you been enjoying the game? Well, you probably haven't gotten that far yet, have you?

Shack: I just got past childhood.

Peter Molyneux: The difference is a difference of steps that we'll be introducing in the game. You just got through the first step, which is the beginner step. The next step is all about, really it's all about that breadcrumb trail, trying to get you to explore a bit, trying to pull you off that. Giving you time with the dog, not too many threats--I don't want you to die, I don't want you to feel threatened. Part of that is because I want you to anticipate combat, rather than just be thrown in. And the the step after that is all about the simulation of animals in the world, and then the step after that is all about combat.

Shack: That decision to slowly ramp up the complexity--the approach is slightly reminiscent of a game like Spore. Do you find it challenging to entice the casual gamers without turning off the core players who already know how to swing a sword?

Peter Molyneux: Firstly, what I've learned as a designer--and I think I've learned more on Fable II probably than any other game I've worked on--it's so tempting just to give you everything and say look, "This is what the combat is like, this is what the story is like, I'll give you big drama and a lot of big guns right from the onset." I've done games like that before, and I think Fable 1 actually suffered a little from this.

But when I sit down I say to myself, look, you're going to playing this for a while. I don't need you to give you everything. It's far better to give you something new--every fifteen minutes there should be something new. Maybe that new thing's on the horizon and you're reaching for it. Maybe it's a new combat style, maybe it's a new thing that your dog does, maybe it's a new region to go to, but just that feeling. I hate the feeling in a game where you think, "Oh god, I'm doing this all over again." I loathe that.

A lot of what it is--imagine if the features are a rubber band, and we're just stretching that rubber band out. We still have the same amount of features, we're just stretching them out, so that when you get these things you're ready for them. So it's a very interesting thing that hopefully you'll find psychologically, and even now that I've just told you I think it works, just at that point where you're just thinking, "Oh, I want something meaty to fight. I'm fighting beetles." That's when we hit you with the first bandit battle. And just when you're saying, "I've been talking to these people and nothing's happening," that's when you get to a city and realize that you've got money and realize how big the world is. We try to just pull those features out.

Shack: Almost like a film, where you're timing action beats.

Peter Molyneux: Yeah, in fact we've thought an awful lot about that in the storytelling. All of Fable 1 was basically [Lionhead Dean Carter] and myself, we did the whole story. There wasn't really scriptwriters to talk of.

But in Fable II, Dean and I discussed the story that we wanted, and then we had proper scriptwriters who did a proper script, that looked like a film script. We hired a sound stage, we got a movie director in to teach us how to direct actors. We got them to act out the entirety of the story just so that we could experience what the story was, because we just wanted a very simple, pure thing.

These are the sort of brazen things we get in trouble for, but: we just wanted to tell the greatest to tell the greatest story ever told. It was that simple. And actually when we started thinking like that, we started realizing we had to go this extra mile.

Shack: I was reading an interview with you once where you mentioned that Populous (1989) sold 4 million units, which would still be a pretty solid number today. Do you think the industry is stagnating?

Peter Molyneux: I really think--and this thought occurred to me in an interview once when someone was saying, "Do you think you're going to sell as much as Gears of War?" And I think at that time Gears of War was around 4 million units. And I thought, "Hold on a second. I got that question in 1989 when I launched Populous." Just how many more people is this industry really addressing? I know it's worth 49 billion dollars, but how many people are actually playing our games? How much are we actually affecting the culture compared to what we should be doing?

20 years ago we honestly thought that [large] percentages of the world's population would be playing computer games. And it's not, it's fractions of the world's population. And I think partly it's because we keep making games for these two separate audiences. We make them for the core gamers here, the casual gamers here, and there's a big great wall between them. If you develop games for casual gamers you're just frowned on a bit.

And maybe part of Fable is about this--look, can't we create a game that both of these people can play and enjoy? Okay, you've got to give the core gamers all the carrots they love, and casual gamers the accessibility that they want. And that's what we tried to do with Fable.

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Shack: You seem very interested in the idea of injecting emotion into games. Is that related to finding a unifying element that will interest both groups of gamers?

Peter Molyneux: Yeah. I think that first and foremost, if you are going to try to pull more people into playing computer games, there are a couple of boundaries. One of those boundaries is this. [Holds up an Xbox 360 controller.] This is pretty core.

Shack: Some people are pessimistic about the industry, and predict gaming will never match film in terms of a wide audience. Do you agree, or are you optimistic about the future?

Peter Molyneux: I think if you look at the games that we make now: who our audience is, what we play, and how we play is changing. You've got games like Spore out there, which I was impressed with, and I find quite challenging in certain parts. You've also got games like LittleBigPlanet coming out, things for the 360 like Lips.

These are not core gamer games, and especially between LittleBigPlanet and Spore, they fall between the conventions that we're used to. I think those pigeonholes that we've created are falling apart--we've had to stuff games into these pigeonholes. And that leads me to be optimistic.

Shack: So you're nearing the end of the tunnel with Fable II. Looking back, how would you describe the project?

Peter Molyneux: I think Fable II was one of those gamers where, anybody from the outside of Lionhead looking in, they were just terrified. Here we were trying to create this vast, huge world, and we were doing it in a sequel.

And we could have just done what lots of other people do with a sequel, which is have a big story, a few more weapons, and just stop there. But no, we introduced co-op, and it's not just normal co-op, we've got these ambient orbs and dynamic co-op. And we introduced the idea of the dog, the idea of buying everything in the world, and people looked at me and said, "What are you doing man? Are you insane? Why do you keep adding these things in?" And so that was quite challenging, to sort of pull all those features into the game and balancing. Learning how to do the story was really quite challenging.

But in the end, I'm immensely proud of it. I think ti's a really unique experience. I think it's something which when you actually play it, when you get into the second or third hour, you're going to sit back and say, "You know, I haven't done this before." I haven't worried about my family, or about money, or about being kind. There are some very unique experiences that I think are inside this game.

Shack: What I think is interesting this time around is how little I feel like I know about the game, even with most of the features revealed. I assume that was a conscious effort on your part?

Peter Molyneux: Real conscious effort by me, because I think gamers turned around to me at the end of Fable 1 and said, "You promised us stuff that you did not deliver. You talked about too much stuff." And I talked about it like an excited kid, and you know, sometimes I talked about things that didn't end up in the game, and sometimes about things that were in the game.

I've stopped doing that. And I said to myself very early on in Fable II, "I want people to be surprised." I haven't talked about huge swathes of this game. I've talked nothing about the story. I've talked nothing really about ownership and wealth, and how it feels to be rich in all the ways that you can be wealthy. I really haven't revealed much about the ambient orbs, and what they mean to gameplay, the ability to sort of leap through time into other people's worlds. I haven't talked about the customization of makeup. Oh there's a lot of stuff--but I'm not talking about it.

Shack: So at this point have you fully shifted your attention to the mysterious nature-themed project?

Peter Molyneux: Lionhead always has two projects, and we've also got experimental teams. We've always had those experimental teams. One of those experiments has turned into this other project that we're working on. It's as different as you can possibly imagine. Of course it's ridiculously ambitious, but I've learned my lesson. I can't tell you about it until I can show it to you. It's almost ready to show, but now the PR people are moving in.

Shack: Do you feel like you are more ambitious than you've ever been?

Peter Molyneux: Well you know, yes, I probably am. It certainly feels like an amazing time in my career, just come off the back of Fable II. And I think, for me, it's time for this industry to be ambitious. It's time for us to realize that we've got a very big mountain to climb, and we can't let technology rule us, we've got to rule it.

Shack: Do you ever feel restricted by that technology?

Peter Molyneux: Yes, slightly. I find nowadays we're more restricted by the production forces--that ends up being the restriction. If you want to make huge, vast game, you can't just keep adding people to the team. You'll just end up with this huge mass of people that don't know what they're doing.

So I think there are restrictions, but I think when I look at the industry and I see games like Spore, LittleBigPlanet, even games like Braid, that are really sort of pushing the boundaries of what we think of as games. That makes me really excited.

Fable II is set for an exclusive Xbox 360 release on October 21.