This answers the biggest question hanging over the Community Games effort -- what will the business model be? -- since Microsoft announced it in February at the Game Developers Conference in San Francisco.

More from Dudley:

Community games will be listed on the slick new Xbox Live interface that will debut by this year's holiday season. A handful of games will be highlighted on the "front page" of the section, in return for an additional 10 percent to 30 percent commission that Microsoft will charge.

The games will include free trial periods, handled by Microsoft. They'll also be sold at three price levels, using the Xbox Live point currency -- 200 points, 400 points and 800 points. [That's $2.50, $5 and $10.]

Community Games will debut this fall in the U.S., Canada and a few European countries. Other countries will be added in 2009.

There are potentially thousands of games for the service - Microsoft said it's XNA game development toolkit has been downloaded more than 1 million times since it was released in 2006 and it's now used in more than 700 universities.

To play ball, an amateur developer needs to pay a $99 annual subscription, allowing them to publish their games to a community of peers who will review them, screening for violations of intellectual property and whether the game has been appropriately rated.

The Community Games effort gives would-be Miyamotos access to an audience of more than 12 million Xbox Live members, circumventing the studio system that has blocked out small developers with off-beat ideas.

See this story about locally based Torpex Games for more on how small developers are benefiting from digital distribution.