LIONHEAD STUDIOS, the video game developer controlled by Peter Molyneux, has raised an estimated £7 million to fund the production of several titles planned for the next generation of gaming consoles, The Times has learnt.

The cash has been put up by a syndicate of private equity firms comprising IDG Ventures Europe, Ingenious Media and Add Partners, in exchange for a large minority stake in Lionhead.

Mr Molyneux, a British game designer whose best known titles include Populous, Black & White and Fable, which was recently released for Microsoft’s Xbox, said that the extra capital would allow Lionhead to develop its forthcoming games to more advanced stages.

It will also allow the company to strike more favourable deals to publish the games, he said.

“The gaming market is becoming extremely competitive, and more expensive, and so the stakes are higher,” the Lionhead chief said.

Mr Molyneux aims to retain ownership of the intellectual property (IP) that lies within the games, allowing the company to earn more revenue by adapting them for use on different platforms such as desktop computers and mobile phones.

“If you lose your IP then you become a production facility, not a creative studio,” Mr Molyneux said. He said the additional funds were also necessary to produce compelling games for the next generation of console machines.

These will include PlayStation 3 and Xbox 2, which are expected to be released in the next 18 months.

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