Microsoft Pacts on In-Game Ads, The Guild

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Microsoft has landed an exclusive deal to distribute the second season of the “Internet cult hit” The Guild, and will be distributing the series’ 12-episode run via the Xbox Live Marketplace, MSN, and the company’s Zune Marketplace. The series will be sponsored by mobile operator Sprint. The first season of the show is being re-released across those platforms starting today; new episodes will begin appearing once a week beginning November 25. Episodes will be available for free.

The Guild is a Web-based scripted comedy written and produced by (and starring!) Felicia Day, who also appeared in Joss Whedon’s popular online effort Dr. Horrible’s Sing-a-Long Blog. The series focuses on the antics and misadventures of a group of online gamers, and its first season was supported by viewer contributions via PayPal. Under the Microsoft distribution deal, Day is actually keeping her rights to the show while collecting a licensing fee; she held on to the show for more than a year, refusing to relinquish business or creative control of the series.

“I don’t exaggerate when we say that we had dozens of offers for the show,” Day wrote in the show’s blog, “But I was adamant that we be able to retain ownership of the show and have the creative freedom to keep the show close to its roots and to our fans.”

The deal makes The Guild the first show to be distributed worldwide simultaneously across Microsoft’s multiple distribution platforms, and marks a new installment in Microsoft’s efforts to expand its online video offerings into original scripted content.

In other news, Microsoft subsidiary Massive has inked a deal with game publisher THQ to run dynamic in-game advertising within THQ gaming titles, including the company’s successful Saints Row franchise. Saints Row 2, which shipped last month, will be one of the of the first titles to feature dynamic in-game ads from Massive. Terms of the deal were not disclosed.