This film is a couple of years old now, but is still doing the rounds. The reason I posted it here is that someone mentioned this spot to me recently, along with the back-story that it had been created by members of the game development team after they had seen the ad agency's piss-poor creative for Mortal Kombat. A good example of how digital is better handled by digital specialists rather than generalist ad agencies...
However, this is legend, not fact. The truth is that this ad was created entirely in-house by Colenso BBDO in Auckland (an ad agency I was proud to call home for five years).
Yes, ad agencies can do killer digital (well, some can).
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