The idea originally was that we wanted you to be able to even download an Arcade game on a memory unit, so that even that largest Arcade game would fit on a memory unit. We quickly realised that, by and large, everyone was either buying a console with a hard drive or was buying a hard drive after they bought their console.

[...] I think that opening up the door to have larger, more immersive type experiences, and allowing developers who were working within some set guidelines to expand that, will bring better games. ThatÂ’s what we want, right? I think thatÂ’s what people will find.

I can tell you that thereÂ’s a bit interest in developing original content, securing exclusives, working with top developers and creators out there to bring stuff to Xbox Live Arcade that is unique and original and the kind of things that people will want to play.

There are some very big announcements around that, coming soon. And I think the fact of that being timed with the increase in the size of Xbox Live Arcade games, should give people a bit of a hint that what you thought of as Xbox Live Arcade in the past is going to get that much better.

Via Major Nelson