If a recent report out of Australia’s “Screen Play” is to be believed, independent developers are finding it harder and harder to get games on Xbox Live Arcade. The report quotes several anonymous sources within Australia’s game development community, venting that Microsoft “buckled” to pressure from established third-party publishers to limit the amount of indie content on the service.

“Screen Play has been told there are now just 35 “slots” a year for independent games on Xbox Live Arcade, but local developers estimate there would be hundreds of titles in development around the world, so many frustrated independent studios will be unable to release their games on the popular service,” claimed the report (via Kotaku).

Because the number of slots afforded to independent developers has been set, the independent developers say they will have to seek out support from established third-party publishers, reducing the amount of money they’d receive per game sold.

Responding to the report, Andrew Jenkins, Senior Product Manager for Xbox Live in Australia and New Zealand said that Microsoft is in fact increasing opportunities for independent developers through the Community Games channel.

“Actually, I see Microsoft opening up more opportunities for independent developers and game visionaries to provide niche and mass appeal products through our community games program,” Jenkins said.

It’d be a shame if Microsoft is capping the amount of independently developed games on their downloadable service. Independent games are the breeding ground of new ideas and concepts, and often times a lot more fun that releases from established publishers. Just take a look at Braid, for example.

Making matters worse, Jenkins suggestion that independent developers look to Community Games for their releases is borderline insulting. In fact, it is straight up insulting. The Community Games platform is a failed experiment and has no commercial incentive to any serious developer.

We’ve contacted Microsoft for further comment, and let you know what they have to say when they get back to us.