A screenshot from ItzaBitza, new game from Microsoft spin-off Sabi Inc.

Microsoft has spun off a new video-game company, Sabi Inc., that is launching its first title based on technology developed inside the software giant’s research labs.

The Windows PC game, “ItzaBitza,” lets children draw objects that become an interactive part of the landscape on the screen. The game also incorporates reading, using an advanced learning framework developed by a University of Washington professor.

“We look at it as a new format – and very complementary to what kids want to do,” said Margaret Johnson, a Microsoft veteran who is now CEO of Sabi. “But we also hope that, from this, they’ll want to read a lot of other things, and want to feel more successful, and just keep being creative.”

Sabi, based in Kirkland, has five employees, four of whom previously worked at Microsoft. It’s the latest company to be created from Microsoft’s IP Ventures Program, which started in May 2005. Under the program, Microsoft licenses technologies to startups and existing companies, typically in exchange for a minority stake.

ItzaBitza uses a technology called “Living Ink” that turns sketches drawn on the screen into active parts of the game. The reading techniques follow a framework called “How People Learn,” developed by UW professor John Bransford. Sabi worked closely with Bransford and his team as it developed the game. The words and sentences incorporated into the game become progressively more complex.

The game ($19.99) is designed for children ages 4 and up. It will be available at retail and www.itzabitza.com. Here’s a video of Johnson demonstrating the game for me this week.