So, 120,000 units * $10 per unit = $1.2MM. That is a nice number for an Indie, but that is not the whole story. Remember, Microsoft should make something for making this cool distribution channel available, and they do take a cut. The publicly available information on this is that the distribution fees for bringing a game to XBLA is 35-70% depending upon participation by MS, i.e. the publisher gets 30-65% of the money collected for game sales. This is very much in line with what the casual portals are charging, so I think it is safe to say the numbers are probably close. Let’s say you are a publisher or a developer that is able to fund your own development, so, a $10 game (800 Gamer Points) would net you $6.50, or 120,000 units * $6.50 per unit = $780,000.
His article goes on to expand on some of the concepts that I was speaking about back in August when I wrote "The Numbers Behind Live Arcade" and he correctly points out that I didn't get the methodology behind those numbers 100% accurate. Regardless, his is a great read and goes to show that the naysayers dissing the feasibility of using Microsoft's XNA toolkit to make a profit on Xbox Live Arcade.