All software publishers dream of producing the "Killer App", something that can lucratively kill all competitors in the market. Microsoft may have that in the Xbox One: the ability to crush the Nielson Ratings. We all know the power of the Nielson families. Some measure their TV viewing with diaries, others are monitored by set-top boxes that call into to a central office to record what is being watched. In spite of their huge power to determine what gets on TV and what gets to stay on, the data is always suspect. How reliable is the diary keeper? Early set-top boxes could only tell you what was on the TV, not who is watching it, or how closely they are following it. Newer models require the user to press buttons on a remote to identify who is in the room, but this requires diligence on the part of the user. Moreover, even these more advanced boxes can't tell if the TV is the focus of attention or merely background noise?
Microsoft is poised to change all that with the Xbox One. And, I suspect that one of the reasons for the "always on" requirement of the new system is directly tied to this new business model that Microsoft seems to be developing.
Here's how it works: You'll plug your cable box into the Xbox One. You'll also connect a wire back from the Xbox One to your cable box that will shoot a signal to it that will let it change channels for you. Want to watch TV? You'll say something like "Xbox on. Watch TV. NBC", and it will turn on the TV, and tune to the channel you want. No remotes to lose, no batteries to change. In practice, the system will look a lot like your current cable box. In the picture above, for instance, you see that Xbox One can deliver the same sort of grid of what is on air as your cable box. The major difference is that you can control it by talking.
Cool, huh? Not so fast.
By now you've probably read that the Xbox One can see you and hear you, that it is always on. This means that it knows when you're watching TV and what you're watching. Even this would be an improvement over the old Nielson diaries. They would have real time data captured from your living room without having to rely on users keeping a diary or pressing buttons on a remote.
Maybe in exchange for being able to command your TV like Jean-Luc Picard engaged the Enterprise, you'd be willing to trade some of your details with Microsoft.
But, though Microsoft hasn't connected all the dots for us, Microsoft's data-mining of your living room goes much further than any diary, or even set-top box, designed by Nielson.
The Xbox One, you see, can recognize you from the others in the room. And, it can track up to six people in the room at a time! It can track whether you're actively watching the TV, whether you're watching or just have it on while you're doing other things. It can tell your reaction to what you're watching by looking for smiles or grimaces. It can even measure your pulse to see how the show is causing you to react. And, it can do all this in a room completely in the dark. And it can do this for six of you at a time.
For advertisers, this sort of information creates entirely new possibilities to project their brands. They'll know exactly the gender, geographic location, and age demographic of every eyeball watching their ads. They'll be able to get data on what caused your heart to raise, your endorphins to rise, your smiles to widen. Plus, they will have access to other pieces of information about you, about what you consumed on your Xbox, how likely you are to purchase on-line, how big those purchases are, and how proximately they are related to advertisements you've watched.
Not only might political campaigns be able to measure your real time reaction to ads, they might also get data accumulated from viewers responses to news broadcasts, and tailor the campaign in ways we can only imagine. You know those panels of people that CNN uses that buzz happy or sad while they watch the Presidential debates? Xbox can gather similar information without any controllers. It will watch you, measure you, quantify your emotional and physical state and match that with your demographic data before sending it upstream to Microsoft.
Down the road, what would happen if Microsoft decided to switch in its commercials for the ones in the feed, targeting the particular people in the room? What if those people were your kids? Before you object, saying that the advertisers would complain, what if they were in on it. In fact, they might pay extra to make sure the right people watched their content.
Now, at present Microsoft hasn't published their privacy policy for Xbox One, but it probably isn't going to be that different from other end user licensing agreements (EULAs) on the web. You've clicked your assent to them dozens of times, probably never reading past the opening paragraph or two. Generally they give the company the right to gather data from you. In some cases they can use it internally to target you directly, though they usually put it as providing a service to you. Most of the time, if they want to share data with 3rd parties they have to aggregate your data, making you more or less anonymous. You are made part of the "wave"; 3rd parties don't usually get direct access to your data.
The thing is, though, that researchers have already found that with a fairly high level of success they can match your anonymous data to you.
Depending on your point of view, here is the most brilliant or damning bit about Microsoft's Nielson killer. They are going to get you to pay for the privilege. The box will set you back $500 and then there is the annual Gold subscription. What do you get? The ability to talk to your TV. And, to Microsoft HQ. Only you can decide if that imposition on your family's privacy is a fair deal.
