A brand new, Xbox-exclusive Fable game is reportedly in development at Forza Horizon studio Playground, marking the return of the popular RPG series less than two years after creator Lionhead Studios was shut down by Microsoft.

Eurogamer cites multiple sources who claim the new game is being envisioned as a story- and character-focused open-world game. A team of some 200 people are working on it at Playground's new second office in Leamington Spa, Warwickshire.

The report stresses that the game isn't close to completion, with production in only its earliest stages.

The original Fable was released in 2004 on Microsoft's Xbox, and enjoyed two sequels in 2008 and 2010. Microsoft acquired Lionhead and the Fable license in 2006.

Fable 2 marked the series' critical and commercial high point, striking as it did an idiosyncratic tone steeped in a British sensibility and sense of humour. That the future of the series remains in the UK will come as a relief to fans, in spite Microsoft's well-publicised decision to shutter Lionhead in April 2016.

The decision was made during the development of Fable Legends – a co-operative take on the series – which was also cancelled at the time.

Following Fable 3 was beat-em-up Fable Heroes, gimmicky Kinect title Fable: The Journey and a remaster of the original game called Fable Anniversary in 2014. Fable Fortune, a free-to-play card game, was released as an early access game in 2017.

On the news, co-creator Dene Carter told Eurogamer: "I have slightly mixed feelings. On the one hand it's great for the UK games industry, and very pleasing that Fable isn't dead; indeed, it will be lovely to play one as a punter, without coming out in hives.

"On the other hand it is a little curious to get rid of the team that is uniquely expert in making Fable, and then try and make Fable. Fable is a weird game, and a tough one to deconstruct for a new team. That said, the team in question is very talented, and I'm sure they'll do a fantastic job."

Playground Games is an independent developer known for Forza Horizon: a spin-off series from Turn 10's Forza Motorsport series. Forza Horizon 3 is regarded as one of the Xbox One's best exclusives.

Playground was established in 2010 and is composed of developers known for their history with racing games. An open world fantasy RPG is a very different game, representing a huge challenge and opportunity for the British studio.

Microsoft refused to comment on the report. We may hear more about the title at Microsoft's E3 press conference in June.