Microsoft (NASDAQ: NYSE) announced this week a new initiative to share a percentage of advertising revenue generated from its games websites with the community of developers who create those games.

Microsoft Casual Games said Wednesday that the new initiative will see developers receiving up to 20 per cent of the in-game advertising revenues generated by their titles.

Casual game developers traditionally operate on a limited revenue model, typically receiving a set fee from downloadable titles or a small royalty associated with game subscriptions,” said Chris Early, studio manager for Microsoft Casual Games at Microsoft.

Now, by sharing in-game advertising revenue, we’re allowing a more diversified business model that gives our partners more resources to create new, innovative titles for the 13 million people we see every month on MSN Games.

The Ad-Share Program, which covers titles hosted on MSN Games, is designed to motivate developers and give advertisers a means of reaching consumers over a longer period of time.

There are two parts to the program. Level I requires little to no change in the development and submission process and offers developers 10 percent of the total in-game advertising revenue generated by their title

At Level II, developers will receive a 20 per cent share but requires a few additions to the game development process. Titles must be receive a Entertainment Software Rating Board (ESRB) rating, and the creation of a “deluxe” game experience that offers players at least 10 hours of engaging free Web-based gameplay.

According to Microsoft, the top five games in the Ad-Share Program can expect to share more than US$ 250,000 annually.