Like Fable II, Lionhead’s upcoming sequel Fable III will see episodic releases on the Xbox LIVE Marketplace “soon after” it debuts on retail, Lionhead boss Peter Molyneux’s confirmed.

“Soon after the retail launch we’re doing episodic,” Molyneux told GamesIndustry.biz. “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 3, 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 also mentioned that they expect to sell over five million copies of Fable III come its launch later this year.

“We are driving to sell more than five million units and to make a profit in excess of $150 million,” he said. “We have to do that because if a franchise doesn’t reach that level it will inevitably wither.”

Fable III launches on Xbox 360 and PC this holiday season.