Why is it such an all or nothing approach to distribution? Getting on XBLA, which requires a publisher (I guess he must be meeting with Microsoft Game Studios then), is extremely unlikely for a indie dev's first game. Value might be able to look away from the game's lack of polish if the gameplay is really good, but even then there are indie games with a lot more polish and award recognition that don't make it on to the service.
Even without Steam/XBLA a good game could still make enough money for a indie dev to make another game
You're right, I was over dramatizing things a bit. It's only getting easier for small indie studios to get their games out and be successful. This really is the indie golden era.
