DURHAM, N.C. — Funcom, an international game-developing firm with an operation in Durham, and a Microsoft-owned company have teamed up to incorporate live video interactive advertising into an online game.

Massive Incorporated, which was recently purchased by Microsoft, and Funcom teamed up to include the advertising in “Anarchy Online”, a Funcom title.

Online players can interact with billboards featuring advertising from Toyota.

According to Funcom, revenues produced by the advertising will help game companies deal with game development costs.

“In Funcom we are always trying to push the envelope in innovation and technology, and this recent move with Funcom, Massive and Toyota is a perfect example,” said Trond Arne Aas, CEO of Funcom. “Our primary goal is always to deliver the best possible entertainment, but to offset the high development costs in today’s gaming landscape we need to look at additional forms of income. What Massive is offering us is exactly that, and we are therefore very pleased to continue working with them to introduce new technologies that give us a competitive edge.”

In a statement, the companies said the advertising effort would lead to advertisements appearing in more games.

“This is just the beginning of interactive ads in games, and we are very pleased to unveil this new technology together with Funcom and Toyota,” said Mitch Davis, chief executive officer of Massive. The move will help advertisers target male game players ages 18-34 in particular, Davis said.

“What is important to mention here though is that we are not adding this to distract from the game experience itself,” he added. “Our company always has the best interest of the gamers and the game experience in mind.”

Massive Incorporated is focused on development of in-game ad technology.

Funcom first incorporated advertising billboards into Anarchy Online in March.

The live video and sound features were added as of June 27.

Anarchy Online is the first game to include these advertising features, according to Funcom.

Funcom is also working with Microsoft on the forthcoming release of its Conan the Barbarian game series. “Age of Conan” is an online role-playing game designed to support many players as a massively multiplayer online title.

Funcom and Microsoft have signed a marketing and development agreement under which Microsoft will showcase Age of Conan. A Windows version of the game is scheduled for release in the fourth quarter.

Microsoft’s Windows operating system Vista will include features designed to capitalize on video and online games growth. Microsoft also plans to integrate gaming capabilities to link players over mobile phones and its Xbox 360 game platform.

Funcom: www.funcom.com