We've heard rumours that Remedy was currently working on a sequel to the well-received Alan Wake but now, according to XBLAfans, that game is an Xbox LIVE Arcade game.
"An extremely trusted source has leaked to us that the upcoming Alan Wake: Night Springs will be an Xbox Live Arcade title and not a retail release," claimed the post. "We have seen screen caps, but have been asked not to disclose them at this time."
Apparently XBLAfans has had inside information on other XBLA releases, so we're inclined to believe that the rumour holds weight, particularly considering the structure of Alan Wake itself. Since the game is designed in an episodic way, it would make sense for the next installments of the game to be delivered digitally.
We've asked Microsoft for comment, and we'll update when we hear back.