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I dispute this fact. I check out Steam on a regular basis and at least a third of games advertised are for the casual market. I can't compare to XBLA because I've never used it but I've always seen Steam as a very effective way of marketing a game. I regularly take a look at game websites/demos based solely on a listing on Steam.
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I'm sure Call of Juarez was a great game by those standards.
XBLA might not be the target demographic or what Lorne wants, but it's the most practical download platform apart form Steam. Nothing else can compete with it.
Offering a deal for both games for 1400-1600 MS points would be just as effective as the Steam re-release except not nearly as many Xbox players will think "I can just torrent this.". If they advertise it properly, particularly most of the gory bits, they could turn some serious green.