Microsoft and Viacom have forged a new five-year partnership which sees the software/console giant licensing video from the media company for distribution over MSN and Xbox Live Marketplace. The Xbox 360 online service in particular already enjoys the patronage of digital programming from Warner Bros. and ESPN. By tapping into Viacom, the Xbox Live Marketplace stands to get new material from MTV, Paramount Pictures and Comedy Central. Viacom seems to be warming up to the prospect of gettings its shows and movies onto the Internet, though of course it's still opposed to seeing its stuff on YouTube.

Microsoft will get access to long and short-form TV and movie titles from Viacom units MTV, Comedy Central, BET and Paramount Pictures for use on Microsoft properties such as MSN and Xbox 360. Given that a wide array of Viacom content is already available to Xbox 360 users via Xbox LIVE Marketplace, the deal mainly adds entertainment from BET Networks. Microsoft’s license to run Viacom’s content is also non-exclusive.

In return, Viacom acquires a new ally for online advertising in Microsoft, but it does so by ditching former ad platform provider DoubleClick (which is already being purchased by Google anyways). Microsoft is hoping to leverage its Atlas online advertising platform, which it scored by acquiring aQuantive back in May, to sell ads. The deal between the two companies is valued at around $500 million USD, though this could increase based on ad spending, sale of ad space and licensing fees.

(Image source: Punit Paranjpe/Reuters)