In the beginning there was 50 MB and it was…OK. Then came 150 MB and it was better. Now, on the eve of two games screaming out for more space, Microsoft more than doubles the size limit for it’s Xbox LIVE Arcade games, increasing the maximum to a whopping 350 MB and nearly destroying any space complaints games such as Super Street Fighter II Turbo HD Remix and Bionic Commando Rearmed might have had.

Originally, the small file size was meant to encourage creativity and ease of use for small publishers but, as games on XBL Arcade have grown more popular, the need for more space was required. Xbox LIVE portfolio manager David Edery explains in an interview with GamesIndustry.biz, “Yeah, it’s a steady progress. We’ve been listening to our partners, listening to our customers to try and get a feel for what’s right. We don’t want the size limit to hit the roof because we think there’s some value in promoting small pick and play experiences that don’t cost USD 20 million, it’s good for the ecosystem.”

Edery also defends XBL Arcade’s game approval system, saying that games almost never get delayed very long despite reports from developers to the contrary and states that “Of the three consoles our tools are by far the best.”

Increasing the file size is an interesting step and one can’t help but wonder whether it is partially in response to WiiWare launching and getting such good buzz. XBL Arcade hasn’t had a must buy game in a bit and with games like LostWinds and Protect Your Castle proving that indie developers can succeed on the Wii, Microsoft is going to have to step it up in order to keep XBL Arcade the leader of the downloadable game pack.