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Kinect’s Killer App isn’t for Gamers; It’s for Advertisers. Welcome to the Age of NUad.

“NUads marks the beginning of a new era for TV advertising. It delivers the one thing traditional TV advertising is missing — engagement. We developed NUads to breathe new life into the standard 30-second spot. With NUads, brands can get real-time feedback from audiences, making TV advertising actionable for the first time.”  - Ross Honey, general manager of Xbox LIVE Entertainment and Advertising (source = Time)

When the Xbox One was unveiled in May it was generally derided for its focus on TV. Weirder yet, it wasn’t what most of us accept that the future of TV is (streaming/DVR/On demand/etc), but instead it focused on cable TV.  Why? While cable TV still makes up the vast majority of the TV market those numbers are shifting and certainly the type of person who buys a Xbox would be on the bleeding edge of that.  During that unveiling Microsoft announced a number of features that were not particularly popular with the gaming core.  Once the preorder numbers started rolling in they started reversing many of the policies but one thing they have refused to budge on is the Kinect and the “enhanced” TV functionality.

Just this morning Microsoft announced that the system will be launching in 13 countries on November 22nd  somewhere around the equivalent of $500 USD.  The PS4, of course, is $100 cheaper. The reason for this is the Kinect, a peripheral that in its three years of existence on the Xbox 360 has yet to change the way that people play games.  It certainly works well for dancing and fitness games though Nintendo sold far more of both with Wii Fit and Ubisoft’s Just Dance series and sales of these titles have struggled in recent years.  When it comes to big budget core gaming the Kinect has been useless.  Some games implement voice commands, something that certainly hasn’t caught fire, and many would point out that you could do that with any USB microphone.  So why are Microsoft so obsessed with the Kinect when it’s clear that it will hamstring sales of its new console for the foreseeable future?  Advertising – plain and simple.

Microsoft introduced the concept of NUads (short for Natural User-interface Ads) in 2011 but the program did not roll out until fall 2012 with ads from Toyota and Samsung.  The idea behind NUads is what has been considered the holy grail to advertisers: to get consumers to be engaged in the advertisement instead of merely observing.  These first ads that rolled out were basic in implementation.  They often offered multiple choice questions or allowed you to vote in a poll.  Most of this flew under the radar, somehow, despite being fairly obtrusive.

If the goal of NUads was just to encourage engagement that would be ok.  Annoying, for certain, but generally inoffensive, especially if you could opt out of them or simply ignore them.  The plan, however, is to continue to push the boundaries of what NUads are capable of.

“How many people are in the living room? Are they taking any action based on the advertising they just saw? Can we watch the customers’ reaction, and if we can, do we have the capability of showing a different ad, or the same ad, depending on what the reaction was?” – Lynn Watts, Xbox Manager (source = CNET)

Wait, what? Come again? So the Kinect is going to collect data on us while we watch ads? Can we opt out of this? Will we be told when this is happening?

 ”With respect to privacy, Xbox 360 and Xbox Live do not use any information captured by Kinect for advertising targeting purposes and NUads is no exception. Microsoft has a strong track record of implementing some of the best privacy protection measures in the industry. We place great importance on the privacy of our customers’ information and the safety of their experiences.” A Microsoft spokesperson in response to CNET.

Excuse me Microsoft  if I find that hard to believe.  To be fair to you, unnamed Microsoft Spokesperson, your quote is from before Edward Snowden blew the lid off of what NSA was doing with the help of Microsoft.  In a story by Glenn Greenwald at The Guardian the following was asserted:

• Microsoft helped the NSA to circumvent its encryption to address concerns that the agency would be unable to intercept web chats on the new Outlook.com portal;

• The agency already had pre-encryption stage access to email on Outlook.com, including Hotmail;

• The company worked with the FBI this year to allow the NSA easier access via Prism to its cloud storage service SkyDrive, which now has more than 250 million users worldwide;

• Microsoft also worked with the FBI’s Data Intercept Unit to “understand” potential issues with a feature in Outlook.com that allows users to create email aliases;

• In July last year, nine months after Microsoft bought Skype, the NSA boasted that a new capability had tripled the amount of Skype video calls being collected through Prism;

• Material collected through Prism is routinely shared with the FBI and CIA, with one NSA document describing the program as a “team sport”.  (Source = The Guardian)

That’s the whole rub with this story. NUads were introduced in 2011 and first rolled out in 2012 in a world where we were far more trusting of Microsoft.  This past year there have been many concerns about the Kinect as this info was unleashed on the world by Snowden and Greenwald.  There’s been a lot of conjecture that the Kinect was designed to basically spy on us but what the vast majority of us seemed to overlook is that Microsoft had already proudly announced that they were; we just didn’t notice.  Not once in the seemingly hundreds of stories, YouTube videos, message board arguments, etc have I heard even a single person mention NUads.  Microsoft has gone dark on the topic this year.  The program itself moves on and with the added power of the Kinect 2.

From a recognition perspective, the new Kinect detects numerous new portions of your skeleton, analyzes the weight you put on each limb, the speed of your movement, and the precise angle of your hands. It captures and displays in 1080p, can track six people at a time and tracks their moods via facial recognition, while understanding the depth of your room so thoroughly as to show the wrinkles in your shirt. Allegedly, and I don’t know how much I believe this is accurate, the hue of your face will communicate to Kinect your heart rate. (Source = IGN)

IGN’s Mitch Dyer is pretty excited about the possibilities that this creates for games in the quote above but here we are two months from launch and they still haven’t shown anything for the Kinect that qualifies as anything other than shovelware.  It has some nice features for UI manipulation though as John Carmack stated “Kinect is sort of like a zero button mouse with a lot of latency on it.” (Source = T3) It’s safe to assume it will be easier and faster to navigate the UI with a controller.  Thus far the voice commands are the closest thing they have to a killer app though I don’t think many people would be arguing how killer it is. Considering that Socom on the Playstation 2 had voice commands with a free packed-in USB mic in 2002 you would have the right to question why this expensive piece of equipment is required for it in 2013.

Microsoft has already veered into creepy territory with Skype (which is a big part of the Xbox One ecosystem) as they try to find more ways to extract revenue from the platform.  Their description of “Conversation Ads” is borderline delusional:

While on a 1:1 audio call, users will see content that could spark additional topics of conversation that are relevant to Skype users and highlight unique and local brand experiences. So, you should think of Conversation Ads as a way for Skype to generate fun interactivity between your circle of friends and family and the brands you care about.  (Source = Skype Blog)

Taking a step back doesn’t paint a pretty picture for what Microsoft’s intentions are for the Kinect.  They were already “compelled” to deliver private info to the government.  They already have touted NUad’s ability to engage customers in advertisements and to track reactions to ads in progress.  It’s hard to take Microsoft at their word when it comes to privacy concerns.  They also have gone suspiciously silent on the subject of NUads this year as controversy surrounding the Kinect has risen.  If you, like me, questioned why the Xbox One is built around cable television and the Kinect 2 and why they are willing to sell the system for $100 higher to include these features…  it seems to me the answer is very clear. While TV viewership is in decline, TV advertising is still where the biggest money is.  Why doesn’t the unit act as a DVR? Considering a huge reason people love DVR’s (beyond recording) is the ability to skip ads, that seems clear as well.  Even if their intentions are pure the Kinect offers them the ability to gather an INSANE amount of data that many companies will be chomping at the bit to get their hands on.  Does anyone expect Microsoft to turn down this revenue stream? Microsoft has told us we can turn off the Kinect during games and applications that don’t require it but it remains unclear if that includes watching TV through the device.

“When we launched NUads, we redefined the 30-second spot,” beamed Ross Honey, general manager of Xbox Live Entertainment and Advertising. “These results show that NUads is a real breakthrough in TV advertising, and you can expect more investment from us when it comes to this new ad format and video advertising in general.”  (source = Eurogamer)

 And you can expect me to go to tell you to go fuck yourself, Microsoft.

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