On Thursday, Internet giant Yahoo! (NASDAQ:YHOO) said that a division of Microsoft (NASDAQ:MSFT) will contribute PC games to Yahoo! Games on Demand. Games on Demand is one of Yahoo!'s latest efforts to monetize its powerful brand and position as the world's most visited Internet destination.

For $15 monthly or $35 per quarter, subscribers can download a variety of popular PC games, including Eidos' (NASDAQ:EIDSY) latest "Tomb Raider," Atari's (NASDAQ:ATAR) "Civilization III" and "MechWarrior 3," and Take Two's (NASDAQ:TTWO) "Grand Theft Auto 2."

The service currently offers 111 games. Microsoft Game Studios will add 15 titles, most notably its "Microsoft Flight Simulator 2004" and "Rise of Nations." With the addition of Microsoft, Yahoo! has a formidable portfolio of software suppliers to help it capitalize on its dominant Internet platform.

Interestingly, Microsoft's Xbox titles aren't included in the deal and probably won't see their way onto Yahoo!'s service any time soon. The Xbox is a Windows-based system, so an Xbox-to-PC-to-Yahoo! port is feasible, but Microsoft is trying to push its Xbox Live online service for the Xbox platform. Most likely, Microsoft wants to keep its blockbuster "Halo" and "Project Gotham Racing" games to itself.

In recent years, Yahoo! has sought ways to profit from its wide reach, while becoming less dependent on advertising revenue. Yahoo! Games on Demand is certainly a promising step in that direction, and Microsoft is certainly a nice partner to have.

Jeff Hwang owns a Microsoft Xbox and occasionally plays chess on Yahoo! Games. He was also once one of 50 highest-rated 9-10 year old chess players in the country. Jeff can be reached at JHwang@Fool.com.