Microsoft said today it would significantly increase the amount of professional content on its European video sites, in a sign that the software giant plans to complete with more wide-reaching sites such as YouTube.

Announcing deals with Sony BMG and MTV Networks that will deliver music and other videos to its MSN platform, Microsoft said that it was hoping to cash in on the growing online video advertising market, which it expected would be the fastest growing category of adverts on the web "for the forseeable future."

The new deals will mean that viewers of MSN in UK, France and Germany will be able to access a significant chunk of Sony BMG's catalogue, including videos from artists such as Avril Lavigne, Bob Dylan, Michael Jackson, and Justin Timberlake.

A similar deal with MTV Networks, a division of Viacom, the US entertainment giant, will let viewers watch clips from South Park and other shows such as Pimp My Ride and Punk'd, which stars the Hollywood actor Ashton Kutcher.

It is understood that Microsoft will share advertising revenue with both Sony BMG and MTV, but no financial details of the deals were released.

Microsoft, which already has similar relationships with both companies in the US, has been struggling to make an impact in online video, and is hoping that by increasing the amount of 'big brand' content on its site it can attract larger audiences. In the UK, only 735,000 users visited MSN video in December, according to Nielsen Online, whereas more than ten million went to YouTube.

It also faces growing competition from a clutch of sites that aim specifically to deliver professional as opposed to user-generated content, such as Joost, which already has deals with CNN and Viacom, among others, and Hulu.com, the yet-to-be-launched joint venture between Fox and NBC.

Speaking at an event in London, Rob Crossen, a business manager for Microsoft's MSN portal in the UK, said: "Online video has exploded in the last year and we're seeing growing competition for consumers' eyeballs as traditional media companies and new players enter the game."

He added that he hoped Microsoft's video platform could become a "signpost for online video," suggesting that people searching for videos online found the array of content confusing, and wanted guidance in the "divided and fragmented world that is the internet."

Part of the reason for Microsoft's new focus on video is the nascent market for video advertising, which still makes up only a small percentage of the overall online advertising budget, but is expected to grow significantly in the next couple of years.

The ads, which typically roll before or after a video when it is played on a site - or appear around it - have so far only really made an impact in a few markets, a spokesman for MTV Networks said, and present difficulties for advertisers trying to measure reach.

"There's a lot of interest in online video, but the advertising-supported model for video is still in the process of becoming a real business," Gideon Bierer, head of NTV Networks' digital business in Europe, said. "At the moment, it's very much about creating destination sites, and improving the viewing experience."

Steve Ballmer, the chief executive of Microsoft, has put the burgeoning online advertising market - which is expect to double from the current $40 billion over the next two years - at the centre of the company's $45 billion bid for Yahoo!, the struggling internet portal.

YouTube, which was visited by 122 million people in December, already has deals with the major record labels which let them take a cut of advertising revenue resulting from visits to their channels on the site.

MySpace, which is owned by News Corporation, parent company of Times Online, also recently announced its first global revenue-sharing deal for online video - with BBC Worldwide - and has a number of ad-hoc relationships with record labels to air music videos on its site.

Explore Tech & Web

• Personal Tech

• The Web

• Gadgets & Gaming

Times recommends

• Tech world prepares for cut-price Apple laptops
• Google takes sober look at drunken e-mails
• BlackBerry Storm joins the touchscreen scrum