I think a lot of people are misunderstanding this article to an extent. Xbox is doing away with Xbox Live Indie Games. You know, that section hidden away in the depths of the Xbox menus?
You know, this Xbox Live Indie Games:
This isn't anything like Xbox Live Arcade, oh god no. This place repulses quality with a passion. Mainly because everyone and anyone with a keyboard can publish a game on there and sell it for a buck. So yeah, good riddance.
However, something that is worth criticizing is the quote "We intend to continue to court developers in the ways that we have". Which is notable because Xbox has a reputation for treating it's XBLA developers like absolute shit, charging them huge amounts of money, restricting the amount of free content they're allowed to give to their player, giving them no control over price. Jon Blow of Braid and Team Meat of Super Meat Boy in particular have been open in criticizing Xbox's current business practices when dealing with smaller developers.