At Microsoft's GamesCom press conference, Peter Molyneux, head of Lionhead Studios, had two announcements for his on-going Fable series.
Fable II is going to be re-released, on September 29, in episodic form. The first chapter will be free, then each subsequent chapter can be downloaded for a fee. It was not announced how much each chapter would cost, but with Fable II already dropped to $40 and sites are beginning to show a Game of the Year edition which would include already released DLC, the price for the episodes can't go too high to make it worthwhile.
Peter's other announcement was the continuation of the series with Fable III. You are the son or daughter of the great hero from Fable II and are destined to rule all of Albion. But you'll have to fight for this right. Once you have become ruler of Albion, the choices you make not only change your way of life, but they can also have sweeping consequences over the entire kingdom.
Ruling an entire kingdom can be tough, so other characters will offer their advice; good or bad. You will find a spouse to rule along side, but they will have constant opinions about what they think should happen. Peasants will come to court and plead their cases and you will have to make decisions based on their testimony.
Fable III will evolve the way you interact with other people. Instead of simply pressing A to sooth a child or court a possible partner, with the use of Project Natal, more realistic actions will be expected.
Fable III can use the save data from Fable II in creating your new character. Since Fable III is not expected to be released until late 2010, that gives plenty of time for players to play through Fable II.