Microsoft (NASDAQ:MSFT) and Electronic Arts (NASDAQ:ERTS) have taken their online partnership to the next level.

This morning, the two companies announced the upcoming FIFA Interactive World Cup, a worldwide video game football (soccer) tournament utilizing Microsoft's Xbox Live online service. Beginning in October, Xbox owners with a copy of EA's FIFA Football 2005 will be able to participate in a three-month-long event, with winning players progressing to regional finals in six continents.

The final will be played in December at the FIFA World Player of the Year Gala in Zurich, Switzerland.

Back in May, Microsoft and EA finally agreed to make EA's games Xbox Live compatible (see EA Goes Xbox Live). That was a huge boost for both companies and gamers as well; while EA's market-dominating sports games were already online-compatible on the Sony (NYSE:SNE) PlayStation 2, the games generally tend to play better on the Xbox. In addition, I also feel that Microsoft's Xbox Live service is a stronger and more cohesive platform in general.

The tournament is part of Xbox's sponsorship of the 2006 FIFA World Cup in Germany. It also represents a significant step forward in online gaming and clearly establishes Microsoft and Electronic Arts as leaders -- and partners -- in the movement.

It won't be long now until we see large-scale tournaments for games such as Microsoft's upcoming Halo 2 and EA's Madden NFL 2005. Incidentally, EA also reported having sold a whopping 1.35 million copies of the American football game in its first week -- already outselling Sega and Take-Two Interactive's (NASDAQ:TTWO) ESPN NFL 2K5, despite the latter being sold three weeks in advance and at $20 a pop. I'd also have a hard time not seeing Activision's (NASDAQ:ATVI) Tony Hawk series in the mix.

All said, the FIFA Interactive World Cup is a wonderful development for any video game fan.

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Fool contributor Jeff Hwang owns shares of Electronic Arts.