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According to Peter Molyneux, Fable III will be available in episodic form with the first part free "soon after the retail launch". From Edge:
More information."Soon after the retail launch we're doing episodic. We break it down in chapters. We give away the first chapter entirely free, the first hour. When you reach a certain point in the game it says 'thank you for playing the pilot of Fable III, do you want to spend an extra 2-5 or whatever dollars to buy the next episode, or buy the whole lot?' Press 'yes' and you will immediately continue playing," he said at the GameHorizon Conference, according to Gamesindustry.biz.
"It supports this freemium idea,” Molyneux added. “It gets around this horrible concept of demos. Anyone out there who thinks a demo is a good idea is crazy. It's never a good idea, because demos are usually done at the end of a game and they require an enormous amount of design talent to make a demo. The other thing is you're more likely to satisfy the curiosity of a user rather than entice them to play more."