http://blogs.wsj.com/digits/2010/11/11/is-your-videogame-machine-watching-you/

November 11, 2010

Is Your Videogame Machine Watching You?

By Dan Gallagher

UPDATE: This post has been updated with further comment from Microsoft.

Microsoft Corp. officials are considering using the camera on their new Kinect videogame system to target ads to people watching the games.

Dennis Durkin, who serves as chief operating officer and chief financial officer for Microsoft's Xbox video game business, told investors Thursday that Kinect - which allows users to play video games without so much as a joystick - presents business opportunities for targeted game marketing and advertising.

Kinect is a camera peripheral that plugs into the Xbox 360 console and allows players to control games with only body movements. The system uses facial recognition technology to sign in players and match them with their avatars and profiles. But the technology can also be put to use beyond those purposes, Durkin said in a presentation at an investors conference sponsored by BMO Capital Markets.

"We can cater which content we present to you based on who you are," Durkin said. "How many people are in the room when an ad is shown? How many people are in the room when a game is being played? When you add this sort of device to a living room, there's a bunch of business opportunities that come with that."

Such a system also could raise questions about privacy. In the past few months, targeted online advertising has been facing increasing scrutiny, and the use of cameras and facial recognition would push such technology into a new realm.

Durkin declined to give out sales figures for Kinect, which went on sale last week. Microsoft recently upped its forecast for the system to 5 million units in the fourth quarter, compared with an earlier projection of 3 million units. Kinect is part of a push by game console makers like Microsoft and Sony Corp. to introduce new controlers that bring in new players. Although, as MarketWatch points out, traditional games like "Call of Duty: Black Ops" are expected to be hot sellers this holiday season, the console makers are hoping the new platforms will ape some of the earlier success of the Nintendo Wii.

UPDATE: Microsoft emailed the following statement about its current policies regarding privacy and Xbox: "Xbox 360 and Xbox LIVE do not use any information captured by Kinect for advertising targeting purposes. 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."