Microsoft is to install profiling software from Predictive Networks in all its digital TV set-top boxes.
Predictive's technology enables a company to profile individuals through their viewing habits and so provide digital TV providers with useful demographics to sell onto marketing agencies.
Both companies point out that individual profiles are not given a name and that the information is stored on the set-top aonly nd not on central computers. But this holds little sway with privacy advocates.
The information gathered could be linked fairly easily to individuals by cross-referencing with other databases. The Predictive product does not do this itself, but as the capability is there, there are privacy implications to consider.
Predictive has also filed a patent for a biometric system which identifies different individuals within the same household. The system works on recognising people's keystroke, mouse or remote-control usage patterns. It says that it generates random, anonymous IDs each time, which have the effect of protecting privacy, rather than invading it.
The full terms of the deal have not been released but Predictive is expected to take $2 per box per year. While this could provide Predictive with millions of dollars a year revenue, the full amount will depend on Microsoft persuading more companies to use its digital TV software and servers.
Andy Beers, senior product manager for Microsoft TV, said of the deal: "Predictive Networks' solutions will provide customers of Microsoft TV with state-of-the-art software to understand customers' characteristics and interests. The result will be the technology and expertise needed to make personalization seamless for the consumer, while enabling incremental revenue-generating capabilities for network operators."
President of Predictive, Devin Hosea, said: "Microsoft is playing a vital role in the evolution of television and has demonstrated a clear vision and commitment to bring innovative products to consumers in order to make TV and all media more entertaining and useful. We're extremely pleased to develop a solution to make personalization a feature for the Microsoft TV platform."
Microsoft has not been doing too well in the digital market so far. It only has one major customer, Portuguese company Cabo TV, which recently said it was having "teething troubles" with MS software. These same troubles saw long-term partner UPC announce this month that it will remove Microsoft software from its boxes and run with competing technology from Liberate Technologies instead.
The only other company using Microsoft's platform is American cable company Charter Communications, which is running a field trial. Charter's chairman is none other than Paul Allen - co-founder of Microsoft. ®