Microsoft has finally tacitly admitted what pretty much everyone has been screaming for months: the Games Marketplace is completely busted. The latest unannounced dashboard update, which hit American Xboxes last night, goes a long way toward solving that problem by mercifully euthanizing the jump-kicking “Game Type” girl that has acted as a storefront for XBLIG, XBLA, and Games on Demand since Metro debuted. After the update is applied, you can go to the Games Marketplace and scroll over to “Games” to see separate tiles for each type of game.

The new update also returns the ability to sort games by category, a feature that was also absent following the Metro update. The Marketplace also now lists “Kinect” as a category, which is a bit odd since indie developers do not have the ability to make Kinect games. This could be a hint of the long-promised Kinect support for XNA, or it could be a product of a system that created the same categories for all types of games. We’ve contacted a Microsoft representative for comment. For right now, the update only appears to be live for American users. A Microsoft representative told us there were no details regarding if and when the update would be available in other regions.

As you might imagine, developers are mostly happy with the changes. “I think it’s a great change, and not just for XBLIG fans and developers. The Games tab now seems much more intuitive for gamers interested in, well, games! Putting Arcade, Games on Demand and Indie up front gives players what they expect to find when browsing the marketplace. It just makes sense now,” said Ben Kane of Going Loud Studios.

Ian Stocker of MagicalTimeBean agreed, but was a bit more hesitant. “It seems good that it’s one fewer barrier to entry for customers… it’s always hard to predict though,” he said.

It’s been a wild, twisted ride for the nomadic Xbox Live Indie Games: they began as Community Games, morphed into XBLIG, were buried in the Specialty Store during the New NXE, then migrated back to the Game Marketplace only to be mysteriously hidden behind that Game Type girl that made it incredibly confusing for the average person to even find an XBLA game. Hopefully this latest update sticks, and Microsoft continues to find ways to move forward, not backward.

Photo Credit: BrunoB