When Microsoft launched Xbox Live Arcade, it imposed a 50 MB size cap on all releases on its service. The reason for this was to maintain compatibility for Xbox 360 owners who do not own a model with a hard drive.
At the time, a 64MB Memory Unit was the only alternative, explaining the need 50 MB limit. A year ago, Microsoft released a 512 MB Memory Unit, which paved the way for the Xbox Live Arcade game limit to grow to 150 MB. A 256 MB Memory Unit is now standard issue on all HDD-less Xbox 360 consoles.
Even with the current Xbox Live Arcade limit three times what it used to be, some developers are finding 150MB simply not enough to fit in all game assets, particularly those intended for 1080p resolutions.
Microsoft, Xbox 360, XBLA, Xbox Live Arcade, Live Arcade