Revealed: The private equity fears that led Molyneux to Microsoft

If the rumours are to be believed, his Lionhead studio came very close to selling out to bullish US outfit Elevation Partners - but in a revealing interview, Peter Molyneux has expressed grave concerns with the private equity model, explaining why he ultimately opted for the relative freedom afforded by new owner Microsoft.

It was an open secret in the industry that Lionhead had been positioning itself for a buyout for some time before the Redmond giant emerged victorious in April of this year. But in late 2005, former EA boss John Riccitiello's private equity organisation Elevation Partners was understood to be closing in on the UK studio to bolster its recently-formed super-developer, created by its shock USD 300m swoop for Bioware and Pandemic last November.

Insiders at the time claimed negotiations had reached an advanced stage, but then all fell quiet until Microsoft bagged its prize several months later, following a rumoured bidding war with a rival publisher, believed to be Ubisoft. In the interim, a struggling Lionhead axed 20 per cent of its development workforce following disappointing sales of key titles.

In a clear swipe at Elevation's business model, Molyneux told our sister site Eurogamer TV: "What some of these big funds and organisations that are setting up are doing is quite exciting - but they're a very unknown territory. There's more than the idea of creating fantastic games that they're thinking about. They're thinking about value and share price and that makes it, I think, slightly different."

Having now had a few months to settle into the Microsoft family, Molyneux was full of praise for his new owner. "It's a fantastic world to be in. I'll be completely honest with you - we were struggling as an independent developer... when it costs so much money to make a game and you need so much partnership and support, being an independent developer's a real struggle," he admitted.

Asked to clarify what swung the deal in Microsoft's favour, Molyneux offered: "I think if you spoke to almost every developer they would probably rate Microsoft incredibly highly as being supportive of the creative process of making a game. It was their simple message that they put to us: go out and create amazing games."

Elevation's alleged failure to swallow Lionhead will have been a blow to the outfit, which counts U2 front man Bono as a director, with analysts arguing that a leading European studio would have been the ideal complement to the existing North American powerhouse comprising Bioware and Pandemic.

But Molyneux's comments suggest a fear that the inherent financial pressures of the private equity model would not allow him the creative freedom he feels his projects require - a freedom that has certainly been afforded, albeit with less than spectacular results so far, to Microsoft stablemate Rare.

However, the Black & White creator did acknowledge that the studio, infamous for protracted development cycles, would be working to tighter schedules in the future - but that this pressure stemmed from the team itself rather than external corporate concerns.

"There's a massive pressure to deliver games on time and that pressure has been fuelled, almost always, by the team," he explained. "Because you cannot anymore have a game in development for years and years - people at Lionhead do not want to spend four years on a game. You try spending four years on a book, a film or a painting, anything creative - you just get worn out. And that is where the pressure to deliver comes from.

"My passion absolutely is to create fantastic amazing games in a defined period of time," he continued. "We have a duty to make them amazing games and try and make them in this defined period. But make sure that we define that period at the right time."

Part one of the exclusive video interview with Molyneux is now showing on Eurogamer TV.