This morning at GamesCom, Peter Molyneux, lead designer of Fable announced Fable Episodic – basically Fable 2 split into 5 episodes.The episodes will be available on the Xbox Live Marketplace, and the first one will be free. Molyneux says, “This is great from a developer’s point of view — are you enjoying this? You could buy the next episode, or buy the whole thing — keeping them in-game.”
Article from Gamersyndrome.com
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Just another gamer. 
Reminds me how Siren: Blood Curse was released episodically. I wonder how much each ep will cost.