Microsoft is again mulling over the request by some developers to up the current restriction of a maximum size of 150MB for Xbox Live Arcade downloaded titles. According to several sources, several developers are pushing Microsoft to increase the size to 350MB.

The reason for the initial limit of 50MB was to encourage the development of smaller accessible titles. Also, because of the speed of slower broadband delivery and the size of hard drives, smaller titles seemed to be a better fit for XBLA.

Early this year Microsoft raised the size limit to 150MB in March, which just happen to coincide with the release of Castlevania: Symphony of the Night port from Digital Eclipse. Microsoft is said to be making an exception for Super Street Fighter II Turbo HD Remix from Capcom, which will likely be the single largest XBLA title to date.

We suspect at least for the time being that Microsoft will continue with the 150MB limit and allow developers to push to a 350MB limit on a case by case basis. With all things considered, it just seems that short of making a new tier for the larger games, the focus of XBLA on the smaller, more accessible titles and the re-releases of old or enhanced versions of arcade games, seems to be the most logical fit for XBLA. While developers can surely make use of the extra space to create some great games, is that where we really want XBLA to head?

Of course, we need to prepare ourselves as larger games are going to cost more, take longer to download, and consume more disk space. While it might not seem like a lot, three 350MB games equal over 1GB, and most Xbox systems only have a 20GB hard drive; which just isn’t going to get it for all of the downloading that Microsoft is encouraging. Look for Microsoft to announce a 250GB or 320GB hard drive for the Xbox before the end of the year. It will not be cheap, but it is the next logical step in order to promote more growth in content delivery via XBLA.