Xbox Live Arcade's portfolio director Chris Charla has admitted that the average price of a game on the service is increasing.

Speaking to at the Develop conference, Charla stated that prices on XBLA aren't subject to the same downward pressure as other digital retail platforms.

"If you look at Live Arcade, and do the math, and look at the publicly available sales numbers, you can see that average prices on XBLA have crept up over the last few years, which has been an interesting trend because on some app markets there's been a race to zero as fast as possible," he said

"We've seen a little bit of the opposite happening. I don't really know where prices are going to go - ultimately, that's set by the market - but it has been really gratifying to see that people are willing to a premium price for digital content."

Average prices on XBLA have crept up, which has been interesting because on some app markets there's been a race to zero as fast as possible
Chris Charla, Microsoft
In 2009, 21 of the 86 games released were priced at 1200 Microsoft Points. That figure rose to 27 out of 85 games released in 2010, and 2011 already has 20 games confirmed at 1200 points, with a number of significant releases due before the end of the year.

However, the proliferation of more expensive games has coincided with a rise in quality. Charla claims that the average Metacritic score for Xbox Live Arcade releases has risen by 12 points since the start of calendar year 2008, challenging widely held assumptions about where to find the best products.

"Sometimes, when [developers] talk about Live Arcade they're like, 'We want to do a boxed quality game on Live Arcade', and I'm like, 'What does that mean?' I can point at a bunch of 38 and 42 and 56 metacritic scoring boxed games, so it actually kind of pisses me off."

"I think the games that we're shipping - a Limbo or a Castle Crashers - are as good as anything on the market."

For Charla, the "beauty" of the XBLA service is that it allows games to be "the correct size," so the experience doesn't suffer in the pursuit of scope.

However, when questioned about the possibility of free-to-play games appearing on the service, Charla had less to offer.

He pointed to Magic: The Gathering, Magic: 2012 and Pinball FX 2 as examples of the service experimenting with micro-transactions, with Pinball FX 2 performing "extremely well".

"For us that's a really interesting model, and we're always looking to be the pointy end of the spear when it comes to experiments, and that's kind of where we're focused right now."

Charla wouldn't comment on free-to-play games on XBLA, but he believes that developers underestimate how open the company is to new ideas, and the company expects innovation on the service to be "game-led."

"Sometimes people get this incorrect impression about Microsoft, that we're very hide-bound or set in our ways, and just because somebody might not have been seeing everything that we're doing, they might think that Microsoft will never do that."

"The reality is... it's actually a pretty dynamic company, and always eager to look and learn. We want to do things right, so we might take our time, but we're always eager to see the innovations people are bringing us."