May 12
2011
Catherine Sullivan

I’m getting ready to speak at an event the Wall Street Journal (WSJ) Digital folks are hosting in Chicago (got to meet Walt Mossberg and had dinner with him and Stephanie Thompson from Olson – see photo) and wanted to share some thoughts on Microsoft’s purchase of Skype.  Although I agree with people here that Microsoft may have paid too much for the deal, there’s a bigger picture focused on MS’s Kinect technology that can’t be overlooked.

A lot of people wrote about the Kinect-connection yesterday, but I didn’t see anyone (and if I missed it, please tweet me @johnchavens to let me know) focusing as much on how important Kinect’s data-gathering technology will become if the massive number of Skype users get an XBOX to use as their interface for speaking to friends via their TVs versus PCs.  It’s a huge deal because Microsoft could tailor ads based on your physical appearance, actions, and the content you engage in.

Picture this—you walk into your living room and because you’re connected to the virtual world via Skype/Kinect, your friends know when you’re home (for an example, watch this Microsoft Project Natal Xbox 360 video here). Think of the green indicator light that you use for Skype that lets people know you’re online.  Now it will let people know when you’re actually in front of your TV.  So a friend pops up in the sidebar of your screen and says: “Hey—they’re replaying Spartacus Blood and Sand RIGHT NOW on Starz—up for watching?” You answer: “Hell, yeah!” And now a bunch of other guys indicator lights show up and you become the Roman crowd watching bloodbaths, while you get to comment to your aggregated social graph(s) about the action in real-time.

It’s this type of experience that is making the phenomenon of Social TV so hugely important to advertisers and culture at large.  Now our actual actions in our living room (not just what we say or what the old Nielsen set-top boxes supposedly reported about behavior) can be shared with our friends, our social graph and advertisers.  To be more specific, here’s what Microsoft’s Dennis Durkin had to say in a recent Engadget article:

We can cater what content gets presented to you based on who you are in a controller-based world. And over time that will help us be more targeted about what content choices we present, what advertising we present, how we get better feedback. And data about how many people are in a room when an advertisement is shown, how many people are in a room when a game is being played, how are those people engaged with the game? How are they engaged with a sporting event? Are they standing up? Are they excited? Are they wearing Seahawks jerseys?

You’ll note in the article that Durkin caught heat when people expressed privacy concerns on this issue, but Microsoft execs immediately contacted the WSJ to explicitly say they do NOT use data captured by Kinect for advertising purposes.  However, they could.  If consumers opt-in to this type of service and start to see the types of content served by the media and advertisers, people would likely welcome this type of targeted information.  Here are some scenarios along those lines:

  • Hyper-relevant ads.  Think about Amazon and your book preferences.  Sure, if you buy a book for a friend’s wedding you may get some recommendations for a few days that aren’t relevant to you, but soon enough they’ll go back to suggesting the general types of novels and movies you like.  Picture that experience with ads—maybe you teared-up over the Google “Dear Sophie” spots and don’t mind having your heart strings tugged by smart tech ads.  So you’ll only see those.

 

  • Incentive-based ads.  If Facebook is paying for you to read ads, maybe Microsoft will pay you to watch ads as well.  If I had had that option as a kid, I would have made $20,000 watching “The Brady Bunch” episodes alone.

 

  • Influence-based ads.  Let me watch an ad, comment on it and rate it.  It’s what I do now on Twitter (“LUV the iPhone spot showing Facetime with the grandpa.  Currently bawling my eyes out”).  If my comments are retweeted enough, brands should reach out to me and thank me.  If they sent me a coupon with a big enough discount, they could probably drive me to the Best Buy near my house to purchase, where I’d let my social graph know yet again that I appreciate whichever brand is listening to my thoughts.

 

  • Location-based offers.  Kinect should move to Windows Phone 8 (not yet in existence of course).  So the proprietary, opt-in, data gathered by my TV/Kinect via Skype the night before will move with me the next day.  Say I watch SharkTank on a Tuesday night and tell friends I’m watching on Kinect/Skype. I might also use the IntoNow app as well.  I comment that one of the entrepreneurs must have drunk too much Red Bull before he or she started the pitch.  So on Wednesday on my way to work as I walk by a convenience store I get a text: “Hi John saw you talked about Red Bull last night.  Wanted to offer a pick-me-up of 25% off if you purchase in the next hour from (name of store).”  That intimate of an event likely won’t happen for another six months to a year, but you get the idea.

 

  • Gaming interactions.  The Nintendo 3DS has a feature called, Street Pass that lets you know when other 3DS owners are nearby.  A light comes on and you get to feel like you’re part of a secret club. That logic will definitely translate for gamers using Kinect and other popular MMOGs (Massive Multiplayer Online Games). So you’ll be walking around and get a text or other communication with someone saying: “Dude! I kicked your ass on Order & Chaos last night!”

 

  • Facebook-based offersYou may have seen that Facebook is now targeting objects in photographs, not just people.  So you may be considered an advocate for a brand just because you bought something once but were tagged in a photo.  So now the hyper-relevant ad scenario I mentioned above is simply reversed.  Someone takes your picture holding a pack of Slim Jims on a Monday and on Wednesday night an ad pops up via Kinect/Skype in the sidebar of your screen saying: “Feel like Snapping into a Slim Jim again?”

 

So again, I agree Microsoft paid a lot of money for Skype.  But the relevant Kinect-ions they’ll make with consumers and advertisers could transform the industry while more solidly ushering in the paradigm of SocialTV into the public’s consciousness.  That’s a pretty solid deal.

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Catherine Sullivan is director of communications.