On Wednesday of GDC I attended Braving the Stormy Waters of Xbox Live Arcade and PSN: Smaller is NOT Easier. Panel title aside, it was really a comparison of developing for XBox Live Arcade, PlayStation Network, and iPhone. First, a terminology note. I'm tempted to call these games "indie games", but even companies as large as Capcom are creating games for these platforms. Thus, I'll call them "small games". Here are the lessons I took away:

It's hard to market small games. Use twitter, facebook, or youtube to build a community and spread your game via word of mouth. Go to conferences to spread the word if you must. Viral is the way to go.

It's okay to ship incomplete as long as people buy into your vision and you continue to release updates. iPhone community is good about rerating updated apps. They gave an example of a game that went from 500th rank to 1 after key updates, but I forgot what it was.

ON THE OTHER HAND: on XBox/PSN, updating is too expensive, because it initiates another round of compliance checks. iPhone looks to be the easiest platform with a 97% app acceptance rate.

XBox 360 allows simultaneous global release of a title. PSN doesn't. On the other hand, PSN is starving for content, so they'll be very helpful. But they're less organized than Microsoft.

Don't depend on a launch window: you can't control it. If a high-profile AAA game (Fable 2, say) ships the same week as you, you won't get any traffic.

Along those lines, digital distribution (DD) is very weak in the traditional retail game season: fall/christmas. Launch your DD games in spring. Maybe someone will figure out how to take advantage of DD at Christmas.

Several people commented that small games are hard. You need to produce a new title every few months, which is very tiring. No time for long, thoughtful showers. You'll quickly learn which programmers are actually pulling their weight. I got the impression small projects require more talented team members.

No mention of WiiWare, Flash, web, or desktop games.