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Microsoft challenges interactive cable advertising with Xbox 360

December 6, 2011 — 1:00pm ET | By Steve Donohue

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Threatening to drain revenue from the cable industry's budding interactive TV advertising platform, Microsoft (Nasdaq: MSFT) is beginning to sell media buyers ads on national TV networks that let viewers with an Xbox 360 console use voice commands and hand gestures to interact with commercials.

As part of an upgrade to its Xbox Live service, Microsoft says it is striking deals with programmers such as NBC's The Today Show and UFC to add interactive enhancements to 30-second spots. "Advertisers can use their existing creative, making it extremely easy to plug in Xbox Live to their overall media plan," Shawn McMichael, the head of ad sales, marketing and services at Microsoft's Interactive Entertainment Business Group, wrote in a blog post Monday.

McMichael touted a deal Microsoft struck with Garnier Fructis. Targeted at female Xbox Live subscribers, the ad lets users with one of its Kinect motion control cameras use gesture controls to order a free samples of shampoo and conditioner.

Cablevision (NYSE: CVC) was first cable MSO to let subscribers use their remote controls to request samples of products pitched by advertisers. Canoe Ventures, the interactive advertising consortium backed by Comcast (Nasdaq: CMCSA), Time Warner Cable (NYSE: TWC), Charter Communications (Nasdaq: CHTR) and other MSOs, is also pushing cable operators to use the industry's EBIF platform to sell interactive ads to media buyers.

Media buyers can currently reach about 25 million cable homes with interactive advertising through cable systems that support EBIF. Microsoft says it has sold about 57.6 million Xbox 360 consoles worldwide since 2005, but it doesn't break out U.S. sales.

While cable operators may be able to offer media buyers a wider audience if MSOs continue to expand EBIF rollouts, Microsoft could sap investments that agencies make in advanced advertising by offering a more compelling and immersive experience than the interactive overlays that cable MSOs and programmers rely on today.

For more:
- see Microsoft blog post