NEW YORK (CNN/Money) - You think politics makes for strange bedfellows? Take a look at what's happening in the gaming industry.

While Sony sits comfortably at the top spot in the console wars, Microsoft and Nintendo have been battling rather brutally for number two. So far, Microsoft has claimed runner-up status, though the sales numbers for the two companies are incredibly close -- which makes it all the more curious that Microsoft and Nintendo have announced a team-up of sorts.

Starting next year, you're going to see some games that (up until now) have been exclusive to Xbox appearing on the GameBoy Advance. Microsoft and third-party publisher THQ announced a publishing deal Tuesday that will bring "Oddworld: Munch's Oddysee" and "Monster Truck Madness 2.0" (among other titles) to the portable gaming system.

From a gamer perspective, this is great news. "Oddworld" is one of the Xbox's most under-appreciated titles and never quite got its due at retail. And Microsoft has some promising games in the pipeline for this fall for both the PC and Xbox (the THQ agreement covers both platforms). It's easy to imagine titles such as "NFL Fever," "MechWarrior" or even the upcoming "Blinx" fitting onto the GBA's screen. One game that won't be going portable, though, is "Halo." It might be the mack daddy of Xbox games, but Jeff Lapin, THQ's vice chairman and chief operating officer, tells me he doesn't think it has the range necessary to succeed on the GameBoy.

Meet Munch. The star of the latest "Oddworld" game will move from Xbox to GameBoy Advance.

"Every game Microsoft has under development is under consideration," Lapin said. "'Halo' is a great game that works very well on the Xbox, but it's niche-y...We're looking for titles that appeal to a broad range of gamers."

Financially, both THQ (THQI: up $0.58 to $29.80, Research, Estimates) and Microsoft could see a significant bump from the deal. Nintendo has sold more than 6 million GameBoy Advances (each retailing for $100) since introducing the unit a little over a year ago. And software for the system is selling just as strongly. GBA games sell for just $30 (roughly $20 less than titles for Xbox or other consoles), but that's still a sizable potential revenue bump.

For each game that THQ ports, Microsoft (MSFT: down $1.21 to $52.95, Research, Estimates) will receive an advance and a royalty based on sales. That should come in handy, considering how much money Microsoft is losing on the Xbox. A Red Herring report says the company will lose $750 million on the console this fiscal year and another $1.1 billion by June 2003. (Compare that to a 1999 estimate by Bill Gates that the company would lose $900 million over eight years on the Xbox.)

The agreement offers THQ the opportunity to cement its growing reputation as the de facto publisher for the GBA's AAA titles. Earlier this year, THQ struck a similar deal with Sega to make GBA games based on its existing properties. That should result in 10 Sega/THQ titles each year. (The Microsoft agreement will result in a smaller number of titles each year.)

Click Lara for previous "Game Over" columns.

But is Microsoft shooting itself in the foot here? Is it, by offering Xbox 'exclusive' titles on the GBA, discouraging sales of the Xbox itself?

Gaming industry analysts say no. Microsoft's recent price cut on the console has spurred sales in a traditionally slow period. (Sales of the PS2 and GameCube are also up after price reductions of their own.) Gameplay styles will be significantly different on the two systems -- and graphically, the GBA can't compete with the Xbox.

There is, admittedly, something humbling about having to use an opponent's system to increase distribution of your games. When the dollars start rolling in, though, don't expect Microsoft to care too much about that.  

Morris is Director of Content Development for CNN/Money. He can be e-mailed here.