Hi Philip. as a matter of personal opinion, I'd say both methods have their place.
One of the primary advantages of private testing is you can ask a few dedicated people to test something which may be rather unplayable. Entombed was actually in private beta testing quite a bit before the publically released version (I was one of the private testers myself).
At that point the game was barely playable, having only the basic combat and navigation features, and balancing issues so severe an instant resurrection key had to be added in.
it wasn't publically playable, but it got the basic systems down very well, and being as it was understood to be a very early version, ---- nobody complained.
public testing however does have all the advantages you mention, ---- pluss of course drumming up anticipation (I think entombed version 1 has to be the most intancipated audio game in history!).
I'd therefore suggest private testing in the early stages up to say version 0.6, ---- ie,a playable and completable bit of game which is comparatively bug free, then public testing there after to get suggestions, try a wide range of systems, and give people the chance to look forward to your game release.
Obviously though, this is just a personal opinion, and it very much depends upon the circumstances of the developer and how decent the gamers' feedback is, ---- I for one wouldn't blame Tom if he decided to never put out public betas again after all the shinanigans over Mota.
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