Freelance game development is not exactly new. The PC has had it for some time now. I don't see how any console's electronic distribution is significantly different than any PC portal's electronic distribution. And what do you see on the PC? Piles and piles of regurgitated, overused game designs and a few exceptional titles.
Now, does that sound like a renaissance or does it sound like what we already have on consoles? A lot of people think that small, downloadable games are somehow intimately or even inexorably tied to innovation, but reality contrasts with that starkly.
As has been noted basically every single time someone flames MS for this, XBLA is a threat to brick 'n mortar stores. On principle, they compete with each other. But MS absolutely needs good support from brick 'n mortar stores if they are to meet sales projections. Their solution was to make XBLA as innoffensive to Walmart, EB, etc. as possible. They simply cannot efficiently sell little games, hence the 50 MB guideline (it's not totally a rule, AFAIK). MS limits XBLA to be complementary to regular stores.
If you'll notice, Nintendo and Sony are following this strategy just in different ways. When e-distribution becomes a powerful force, MS's restrictions will drop off. But that's not a battle MS needs to win, so they're playing both sides for the time being.
Worst case scenario, lets say in some future are all games downloaded, and none are sold at retail. Will retailers then still carry game hardware? The answer is clearly a resounding yes. First they do make a small profit on hardware sales. More importantly is the competition factor, if Wal Mart carries Xbox 360's and Target doesn't, that's more customer trips to Wal Mart, and getting people in the store is a very important goal for any retail chain, because they know that people dont typically purchase just the one item they came for on any trip to the store. They typically add a few more higher profit items into the basket before they check out. Of course that's the whole reason behind advertised loss leader "door buster" deals. That's even not considering console accessories (wireless controllers, memory cards and whatnot), which are even more profitable for the retailer. Any ONE of those three factors alone would probably be enough to force them to carry the hardware, let alone all three, after which it becomes a no-brainer, even if not a single console game was ever sold at retail.
Just as an aside microsoft has specifically mentioned one way they keep retailers involved with XBL is the sale of those LIVE and mspoints cards. Tons of kids dont have, or maybe mommy doesn't want them to use her, credit cards so they purchase those cards at retail. Another thing to consider, if a kid buys his XBLA games with a points card purchased at retail retail is kept involved.
I have another theory on why XBLA games are limited to 50MB (even if that limit might righly be increased to say, 250 MB in the future, which I think makes sense and will probably happen, doesn't change the point), because by nature it restricts the games to that small, arcadey nature. It's like a self-limiter. I mean there's no rule saying XBLA games cant be 3D, right? So what's to prevent some 3D epic being sold on XBLA? Well, one of the primary things preventing that is the 50MB limit. Microsoft has said they dont see XBLA supplanting traditional full size games. It will be a bonus, an add-on, a nice secondary thing, it's not strategized to be the main enchelada, at least at this time.
Now, whether in the future we will see full size games over Live, I dont know yet. That's a whole nother ball of wax.
I think the real killer downloadable app for these consoles though will be downloadable movies for purchase/rent. It will work spectacularly because the console is typically already attached to the main TV.
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Waterbongs
I hope Ninja Theory makes a EDI title after Heavenly Sword. How about it DeanoC? nAo?
