Microsoft's Xbox 360 video game console aims to steal even more business from television networks, launching interactive ads on TV this fall. As part of this effort, Microsoft has signed deals with Toyota, Unilever and Samsung Mobile for the offering called NUads, which will debut in a few months. The new ad formats will be available to consumers who use Microsoft's Xbox console to watch video via apps from Microsoft partners, including ESPN, NBC News, TMZ, and the UFC.
In the first batch of ads, NUads will allow users to vote in response to various questions asked in the ads. For instance, Toyota's ads will ask consumers for their opinion and desire towards other devices they would like to see "reinvented" like the company has "reinvented" some of its car models. Users can answer such questions either by clicking a button on a controller, speaking, or gesturing with their hands when using the Xbox 360 Kinect add-on that includes a camera and microphone. Toyota will receive the data on how consumers voted, along with demographic information on the voting blocs.
'Premium' Rates
With this strategy, Microsoft aims to benefit from what Ross Honey, Xbox Live general manager of entertainment and advertising, called a "premium" compared with standard commercial rates. "There have been interactive ads on the Web before, but the beauty of it is that we're bringing that to the TV," said Honey, as cited by the LATimes. "It's a substantially more valuable ad product."
The U.S. TV advertising business is worth $68 billion, and getting a significant portion of it will be a great challenge. Major advertisers tend to be conservative, and a traditional TV can seize large audiences at a single time, which is a major advantage.
Microsoft, however, bets on the fact that increasingly more marketing executives are easing into the idea of spending big money online. With this in mind, the software giant hopes to offer an attractive alternative between television and the online environment, by putting the benefits of the Internet on a TV screen.
Betting Big on Xbox 360
This latest move is part of a larger strategy, as Microsoft aims to make its Xbox 360 the most popular device for getting video from the Internet, thus stealing viewing time away from cable and satellite services. This strategy was an important point on the agenda at Microsoft's news conference at the E3 industry event last week.
According to Honey, Microsoft's ad revenue on the Xbox 360 has jumped 140 percent from the same period in 2010. "It's small for us but in the context of most companies it's substantial," he said. "We're well ahead of just a few million dollars a year." Microsoft's Xbox Live online service has more than 40 million subscribers. The company did not state how many of those use the video services part of NUads, but said however that its online users spend more than half their time on Xbox Live streaming music and video rather than playing games.
