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Welcome to Microsoft Pri0: That's Microspeak for top priority, and that's the news and observations you'll find here from Seattle Times reporter Sharon Chan.

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July 23, 2008 11:07 AM

Microsoft, Sony producing original video content for online game networks

Posted by Benjamin J. Romano

Microsoft is co-producing a series of digital short films for distribution over the Xbox Live in another sign that online gaming networks are becoming more like all-in-one digital content distribution channels. Meanwhile, Sony is eyeing its own exclusive video offerings for distribution over the PlayStation Network, possibly in partnership with the company's formidable movie and television studios.

Updated, 4:03 p.m.: New comments from Microsoft after the jump.

Microsoft said today it's working with Safran Digital Group -- as in Peter Safran, producer of movies including "Scary Movie," and "Meet the Spartans" -- to produce exclusive comedic shorts for free distribution to the 12 million Xbox Live members beginning this fall. In a twist designed to appeal to the gamer audience, the short comedies will be directed by horror-film directors.

It's the first time Microsoft is getting a producer credit on original content, a company representative said.

Update, 4:03 p.m.: The short comedies are actually pilot episodes -- all in high-definition and less than 10 minutes in length -- that Microsoft could pick up as an online series, "pending the excitement of the consumer," said Scott Nocas, group product manager for Xbox Live. The pilots will also be distributed over MSN and Zune.

If a show takes off, Microsoft is open to distribution as a television show, comic book, movie or other format. "What's great about it is it stays Xbox branded. ... We get to be a part of it throughout the entire life cycle of the [intellectual property]," he said.

The move toward exclusive, digital content production and distribution highlights the escalating battle between Sony and Microsoft to offer more than just games over their online networks.

Microsoft has a substantial lead both in audience and the scope of its content library (which will be further broadened by a partnership with Netflix announced last week). It has been distributing digital video over Xbox Live since fall 2006.

Sony, meanwhile, launched its foray into video distribution over the PlayStation Network last week. But when it comes to negotiating video deals and producing original content, PlayStation has a major asset in parent company Sony's film and television units.

In an interview last week on the sidelines of the E3 Media and Business Summit, Peter Dille, executive vice president of marketing and the PlayStation Network, described the company's original content ambitions.

"We're looking at having content that you can't find anywhere else, investing in our own content and having it debut on the PlayStation Network. ... There's lots of conversations and everyone at Sony Pictures is excited about the service."

Already, Sony offers exclusive video content -- such as a rare tour of the Ferrari automobile plant -- attached to the "Gran Turismo" car racing game.

Dille summed-up how Sony sees the opportunity of an Internet-connected game console in concert with an online content network:

"It wasn't an accident that we named it the PlayStation Network because it is a network, and just as there's a cable network, we now have--- we're a distribution company with our own pipeline into a consumer's house. That gives us tremendous opportunities to build new businesses."

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