Xbox LIVE TV and NUads for Kinect could save TV advertising

Microsoft's NUads system for Kinect – combining interactive content with adverts – failed to cause waves when the company announced it earlier this week, perhaps because (unless you're Apple) it's a tough sell to make advertising sexy. Intended to encourage Xbox 360 users to actually pay attention to promos rather than tuning out until the real content arrives, NUads reacts to spoken and physical commands tracked by the Kinect sensor bar, pulling up more information on products, setting scheduling reminders for upcoming shows, and tweeting out anything that has particularly caught your eye. With a little work, though, it could be the entertainment industry's salvation.

The name of the game with NUads is audience engagement. Right now, there are plenty of things to distract us while adverts are on live TV, and little reason not to skip past them on recorded content. Microsoft's ploy is to make ads social and "irresistibly interactive" by building in simple to use commands and gestures, while advertisers themselves get vital feedback on who is actually paying attention rather than playing Angry Birds on their phone while the promo is showing.

Microsoft's Xbox LIVE TV service, announced at E3 2011 earlier this month, met with scratched heads as people wondered exactly why the console should be their smart TV STB of choice. With the addition of NUads, however, the reasons that users and content providers might want to get Xbox involved in the viewing experience becomes far clearer. Set to launch in the fall – though with no US partner(s) yet announced – Xbox LIVE TV will compete with the STBs provided by satellite/cable TV providers (many of which are rented to viewers for a monthly fee) and use voice commands to search for shows through Bing on Xbox. Meanwhile the same Xbox LIVE TV functionality will also be available on Windows 8 PCs.

It's not perfect yet, though. One of the commands – "Xbox Schedule" – automatically prompts the system to send a text message reminder to a user's phone, prompting them to watch a show when it's broadcasting. More useful, however, would be the ability to turn your 360 into a DVR, automatically setting the console to record an upcoming film or show. Viewers often fast-forward through the adverts in recorded content, but if Microsoft slotted in fresh NUads – themed to the show as well as other interests as tipped by your Xbox LIVE activities – then that might be enough to persuade them to keep watching. "Xbox Near Me" pulls up a map of nearby retailers offering whatever product is being advertised, but why not do the same for movie times, showing nearby theaters and allowing viewers to book tickets and even reserve specific seats, all by pointing to where they want to be in the theater.

Charge it directly to the Xbox LIVE Points in a user's account, perhaps, and then shuttle a digital ticket to their Windows Phone device. We criticized Microsoft in our Windows Phone Mango technical preview for not yet making the most of its smartphone/Xbox pairing, and NUads would be a great way of doing that. Something catch your eye on-screen? Flick it over to your phone with a quick gesture or keyword, and watch as a digital coupon shows up on the handset.

Remember, it's not really end-users that Microsoft has to convince on NUads, it's content owners and advertisers. If the company can get enough of those onboard, then Xbox LIVE TV will gradually start to offer more shows than rival systems. Once that happens, the users will naturally gravitate toward it. Selling them on the idea of a motion and voice controlled interface wouldn't be too hard: a Minority Report style advert or two ought to do it.

The sticking point may well be getting everything to gel, something the company has arguably struggled with the most in the past. Microsoft has all the pieces for an advertising rescue mission: now it just has to put them together.