Earlier this morning an article on the Kotaku website ran a rumor which stated that Microsoft was halving the royalties they pay to indie developers for games made on the Xbox Live Arcade.

Several well-informed sources on the site noted that some developers directly affected by this royalties cut had their shares dropped from a generous 70 percent given to them by the company to a measly 35 percent within the past few months.

The supposed reason behind this is because of Microsoft's reliance on creating games using the company's XNA software package to Xbox Live users for an undisclosed price.

Upon contacting Microsoft on their stance regarding the matter, this was the statement they released:

Xbox LIVE Arcade has long been known as the premier destination for digitally distributed original and classic games - making it a very appealing platform for game developers. We don't disclose details on our business contracts, but what we can tell you is that we work closely with all of our partners to provide the Xbox 360 community with the best entertainment possible while making publishing a title on XBLA an attractive prospect.