The State of Indie Gaming
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The Web
Some people may disagree with this statement, but frankly if there is one platform where most of the radical innovation in video game design is happening, that platform is the World Wide Web. For every innovative Wii game in the market, there are dozens of innovative Flash games.
It's not only because the barriers of entry and the production costs are lower, it's also a platform open for experimentation. You can throw something out there, discover that you wanted to change something, change it on your server, and boom, it's available for everybody else.
If you were at the Experimental Workshop at GDC, you probably have seen that a lot of the games shown in the workshop were made for the web.
It's pretty tricky to monetize those games, though. But there are some ways of paying the bills. Some people are going the way of non-exclusive licenses. Sites such as Miniclip, Addicting Games, and others have been paying for one-time fees for licensing games. Sometimes they'll ask for exclusivity, and they are willing to pay a premium for that.
Some developers such as Nitrome and Paul Preece (creator of Desktop Tower Defense) have been able to license out their content while keeping it on their web sites. They have amassed a good number of players per month on their own web site, and they run various kinds of ads around and before their games start. So, in other words, by licensing the game out they cover most of the development costs, and they also make money from their own audience.