Microsoft, best known for PC software, has been experimenting lately with a completely different type of product: a live, prime-time game show.

But TV host Pat Sajak wouldn’t know what to make of this one. Microsoft’s digital version of 1 vs. 100 appears on a regular schedule on the Xbox Live online gaming system—combining the interactivity of videogames with the spontaneity of live television. Tens of thousands of Xbox 360 gamers compete from their couches, using their game controllers, with animated characters representing them on-screen.

“These aren’t people casually watching TV,” said host Chris Cashman, who narrates the action during each live show, also appearing on-screen as an avatar. “They’ve logged in, they’re here on purpose. That’s why I think it’s so much more interesting and fun than the other stuff I’ve done.”

That’s essentially the same pitch Microsoft is making to advertisers. 1 vs. 100 is part of an effort by the company to build its online business beyond standard Internet search and display ads.

The pilot season of online 1 vs. 100 began in the spring, with Sprint and Honda as initial sponsors. More than 2.5 million people have downloaded the game since its launch, and as many as 114,000 people have competed simultaneously in the North American live show, the company says.

To be sure, that pales in comparison to the audience for traditional television game shows. The recent revival of ABC’s prime-time Who Wants To Be A Millionaire? attracted about 7 million viewers on a Sunday night.

But Microsoft says the distinction between “viewer” and “competitor” is significant.

“It’s a ‘lean-forward’ experience,” said Jeanie DuMont, a senior product planner in Microsoft’s Entertainment and Devices Division, who oversees the placement of branded advertising and sponsored content inside the Xbox Live system. “You’re directly engaged with the game, and you’re part of the action. So we’ve been able to create this ad-supported model that capitalizes on that high level of engagement.”

Sponsorship packages include advertising, product placement, and branding inside the game. Sprint, for example, received naming rights for the virtual theater where 1 vs. 100 is played. Microsoft also offers video ads during commercial breaks, which aren’t subject to fast-forwarding.

“For me, this is reinventing a genre—not only videogames, but television,” said Oren Stambouli, a television-industry veteran who is now producer of 1 vs. 100 on Xbox Live.