http://www.pcgamer.com/microsoft-asked-the-now-disbanded-runic-games-to-make-another-fable-game-and-very-nearly-published-torchlight/

Torchlight and Hob developer Runic Games is sadly no more after its publisher Perfect World shut it down last week. Following the news, one of the studio's founders, Travis Baldree, has spoken to Kotaku about the early days of the company, and there's a couple of noteworthy insights. The most interesting for me is that before Perfect World decided to publish Torchlight (which is a brilliant action-RPG, by the way), Microsoft came very close to snapping the title up.

Runic had "extensive meetings" with Microsoft and even went through company vetting to gear up for the arrival of the game. But Microsoft changed its mind at the last minute, instead asking Baldree and co to work on a game in the Fable series.