Game creators working on new releases have revealed that are in the midst of a "secret war" with and the Live Arcade, according to word from Develop magazine this week.

According to the magazine's report, which cites secret sources, MS recently slashed developer royalty shares by 50%, with Nintendo hoping capitalise on developer dissatisfaction with the game download service.

Nintendo hope to offer a more flexible service, while we're promised that the WiiWare channel will not be smothered with re-releases of ancient hits.

"Nintendo has made it very clear to us that we'll not only be making a better royalty rate from WiiWare games, but we'll also have a better chance of selling games - the service won't be clogged up with the retro titles that have blighted the chances of many independent studios on Arcade," one boss told the magazine.

One developer candidly affirmed: "Frankly, we're not looking at making games for Xbox Live because the service is full of shit."

More soon.

By Luke Guttridge