Parents and their young children will be able to interact with a series of unique, educational, fun and easy-to-play games specially created for the network.
Initially, 10 games will be created, including memory games, colour-matching games and an interactive version of 'Heads, Shoulders, Knees and Toes'.
Liran Talit, managing director of BabyTV, said: "We want to create a subscription service that is both fun and stimulating.
"Two Way Media's expertise in creating great games, combined with our knowledge of how to engage with a young audience, will create a must-have subscription games service for our viewers around the globe."
The new service will be called BabyTV Interactive and goes live in the autumn.
It will be available to TV networks that carry the BabyTV channel, including IPTV, cable and satellite networks globally.
James Turner, sales director at Two Way Media, said: "BabyTV has given us the opportunity to show our creative and technical skill in creating fantastic, interactive branded content targeted at a very specific demographic group, in this case children under three and their carers."
BabyTV has been available in the UK since October 2005 and is featured on Sky (Channel 623) and Virgin (channel 703).
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