Your TV is watching you

Advertisers want to use new technology to monitor your every click -- and prevent you from tuning out their ads. And don't even think of trying to escape.

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Your TV is watching you

Several years ago, Predictive Networks, a software company based in Cambridge, Mass., set out to determine what it could tell about a person based on how he or she used a television remote control.

Predictive discovered that by recording every button-press on a remote and analyzing the resulting data, the company could pick out distinct “channel surfing patterns.” After learning these patterns, Predictive’s software could determine which one of several members of a household has control of the TV at any particular time. Predictive found that men and women use the TV remote control quite differently; during commercial breaks, men engage in a kind of rapid-fire channel surfing, while women tend to switch to only one or two other channels, if they surf at all.

When the company combines this remote-usage data with information on the shows and ads that the person using the remote has watched, its software can guess whether a viewer is male or female. And, because your channel-surfing behavior is significantly affected by others in the room, Predictive can also tell whether there is more than one person watching the television.

The company’s software — which it now sells for use in cable and satellite set-top boxes — builds digital profiles of each person regularly using a particular TV, a statistical analysis of your TV tendencies that functions as a sketchy picture of your personality. Peter Mondics, Predictive’s CEO, says that his software can get to know you quite well. It can, for instance, suggest with surprising accuracy what you may want to watch on TV.

Predictive says that it has gone to great lengths to protect the data its software collects about people; the company uses no personally identifiable information, so your name is never tied to your profile. But the company’s software is indicative of a trend in the TV world, one toward ever-more “targeted” advertising that relies on gaining more and more knowledge about TV viewers. The TVs and TV accessories currently being sold to Americans — digital video recorders, set-top boxes, etc. — can now be equipped with software to monitor how we watch those pictures and to report back to advertisers. Soon, companies will be marketing cars, soap, insurance and beer by addressing each American’s innermost wants and needs — do you like great taste, or less filling? — right in our living rooms, on our trusty old TVs.



In an era of deregulation, much of this monitoring is currently not illegal, and there are signs that cable systems like it that way. After Sept. 11, 2001, when Attorney General John Ashcroft asked Congress for more power to monitor cable lines to fight terrorism, the National Cable and Telecommunications Association, a cable industry trade group, did not strenuously object. Many critics accused the group of wanting privacy rules relaxed for its own members’ marketing purposes, although the NCTA denied that charge. At the same time, at the behest of movie studios, legislators in several states are now contemplating laws that would prevent TV viewers from connecting many devices to their cable and satellite systems that could protect them against being profiled by their TVs. Which means that soon — and imperceptibly — our rights as couch potatoes may be radically circumscribed: They’ll have the right to watch us, to study us, and to sell to us, and we won’t be able to do anything about it.

Other than turning off the TV.

In 1984, arguing for deregulation of media industries, Mark Fowler, President Reagan’s FCC chairman, famously called TV “just another appliance. It’s a toaster with pictures.” As critics pointed out, Fowler’s comment missed the mark: The societal impact of TV, its power to shape our lives as it does, goes way beyond that of sliced bread. If TV is just a toaster with pictures, then paintings are just cloth with drawings, and books just paper and ink. But Fowler was right in one sense; until recently, our TVs haven’t been terribly sophisticated devices. At the time he spoke, a TV was, technologically at least, not much more intelligent than a kitchen appliance, and it always had been that way. In the ’80s a TV worked pretty much the same way that one did in the ’50s — you just plugged it in and turned it on. Along the way there had been some improvements — a color picture, the remote control, the VCR — but none of those things altered the essential transaction a viewer makes with his television: You watch the TV. It doesn’t watch you.

But the digital technologies of the 1990s changed that relationship. Digital set-top boxes, satellite receivers and digital video recorders such as TiVo allowed television sets to act as mini-computers. TVs can now process data, store it, and transmit it to other machines. The new devices have obvious advantages; they allow for hundreds of channels, produce on-screen guides to make those channels more navigable, and, in the case of the digital recorders, give viewers unprecedented power over TV networks’ programming schedules. But they have other capabilities, too. TVs equipped with the new technologies can, for the first time, monitor the people watching the screen.

Indeed, one of TiVo’s main features is its ability to predict what you may like to see based on other shows you’ve enjoyed, and many set-top boxes employ similar profiling technology. And, so far, the products on the market seem to work in accordance with privacy polices that could probably satisfy the vast majority of us. TiVo’s policy, for instance, allows your box to send viewing data to the firm in a manner that keeps the information anonymous. This lets the company compile information about how all its users watch TV, but it can’t determine anything about a single user.

But it’s difficult to remain sanguine about current privacy policies when you think about how people use television. Watching TV is a particularly passive experience, completely unlike reading a book or surfing the Web. When you watch television you are, physiologically, extremely relaxed and suggestible. Think about the way you use your remote control. Most likely you have the shape of the buttons memorized; you handle the thing in a kind of hypnotic state, changing channels without even really thinking about what you’re doing. Imagine what that “clickstream” — the chronological record of every button you press — says about you: The speed with which you change channels, the frequency with which you press the mute button, how loud you like your TV, what sort of music videos catch your eye, what sort of ads catch your eye — all that information can tell quite a story. And getting to that story, that intimate picture of your interaction with your television, would be an advertiser’s Holy Grail.

Several companies, including Predictive, the firm that analyzes remote control clicks, are working on ways to mine all the data from your viewing habits in order to produce a detailed picture about you. And the pictures are quite accurate. For instance, on average, people spend about 270 seconds on the channels Predictive’s software determines they may like. That’s significantly better than the channels those people key in themselves — 150 seconds — or that they get to by browsing with the channel-up and channel-down buttons (eight seconds per channel).

Representatives of all of the companies interviewed for this article stressed that their technologies protect the privacy of their users, and, in many instances, their words are backed up by stringent privacy policies. But David Burke, a writer, computer programmer and the head of White Dot, a British group that wants us all to watch less television, is still concerned. Burke, who began thinking about and investigating the nefarious possibilities of iTV several years ago (he wrote a book on the subject called “Spy TV,”) has published some rather damning inside-baseball conversations with executives pushing interactive television, folks whose concern for users’ privacy is clearly overshadowed by their exuberance for targeted advertising dollars.

In the summer of 2001, he “infiltrated” a meeting of the Addressable Media Coalition, a trade group representing companies interested in “addressing” specific commercials to specific households. There’s a lot of money to be made here; companies will pay much more to sell ads to those people already inclined to buy its products. (It does you no good to show a Mercedes ad to a struggling musician, the thinking goes.) But Burke discovered that the companies proposing an addressable TV-ad market are rather secretive about the whole business. “You don’t want to talk to the press about any of this,” one executive said at the meeting. “If some bad P.R. got out, whether it’s true or not, it might take us a year to make it up.”

“Everyone nodded,” Burke writes. “They all agreed they couldn’t afford to make the same mistakes they had on the Internet — rushing into a medium they didn’t control, without a strategy in place, a back-up plan, just in case users found out about all those cookies.” He adds that “companies who make interactive television are keen to talk about ‘the coming digital revolution,’ hoping viewers will forget about the one that has already happened. Interactive TV is really a digital counter-revolution, walling in the content that viewers can see, and handing control of their news and leisure time back to broadcasters.”

Like many new technologies, interactive TV will enter our lives by promising us more power. It won’t be an empty promise; TiVo does give you new control of your TV, as will the video-on-demand and shop-from-your-couch services that are coming fast or are already here. But, as happened on the Internet, the power we’ll get from interactive television will often be circumscribed by advertisers and media companies that want to make sure we don’t all get out of control. Just as we’ll get more and more DVDs that won’t allow you to skip through trailers for other films, we’ll have digital video recorders that prohibit ad-skipping and video streams that we can’t record onto other devices.

The story of TiVo is instructive. TiVo, the firm, is a small California start-up, and the device wasn’t part of the TV industry’s script for the rollout of interactive television. The machine has not been a fantastic seller, but the people who own TiVos are delirious in their appreciation for them, which doesn’t make media companies happy. The networks saw some advantages to devices like TiVo — such a system would be necessary to provide on-demand video, a possible revenue generator for content firms — but there was one obvious downside to the device: It let users skip ads.

When TiVo came out, “everyone thought it was just a killer of commercials, and that was great,” Burke says. But after media firms began raising concerns about that feature — with prominent executives likening ad-skipping to “theft” — “TiVo changed and said that they would work with media companies.” Sonicblue, one of TiVo’s main rivals, was sued into bankruptcy by media companies upset over its Replay TV recorder; but since it has become more accommodating to content companies, TiVo has avoided legal troubles. Many critics have noted that if it wanted to, TiVo could give its users a lot more freedom. The devices are capable of skipping ahead 30 seconds (the length of the average commercial) with the click of one button; but that feature is hidden, and you need a secret code to turn it on. TiVo could also automatically make its devices skip through all commercials automatically, but that was the feature that got Sonicblue into trouble, so it’s not likely TiVo would do that. TiVo currently has many advertising deals with the country’s biggest media firms, and Disney, Sony, AOL and others have invested in the company.

But many in the TV industry are still wary of the sort of control TiVo gives its users, which is why a number of companies are developing TiVo-like systems that give users a taste of freedom and enable targeted advertising, while still keeping viewers firmly tethered to the networks. One of these firms is NDS, a subsidiary of Rupert Murdoch’s News Corp. Dov Rubin, an NDS vice president, says that the company’s main business is “protecting the revenue stream of broadcasters.” The company does this by offering “conditional access technology” (the part of the cable infrastructure that allows for scrambling and de-scrambling of premium-channels) and interactive television systems that allow content companies and broadcasters wide latitude in determining how viewers can use the systems.

For instance, NDS has a digital video recorder that allows broadcasters to say whether or not users can skip over ads. The recorders “obey commands on the broadcast stream” to decide if a user can perform a specific action, says Rubin. “The programmer could designate that the following commercial cannot be fast forwarded,” Rubin says. “But they also have tools to make it more subtle. The device may just jump to the last five seconds of the commercial, because there’s the theory that you’d put the logo there. Or, because there’s this kind of intelligence in the box, it could skip to an abbreviated version of the commercial resident in the box — so you thought you were skipping, but you’ve seen a subtle version of the ad instead.” Rubin notes that NDS only provides “the building blocks,” and that it’s the broadcasters who control the features.

You might wonder who would buy a DVR system like NDS’s when, instead, one could buy a TiVo that skips over all ads, regardless of what broadcasters want. The answer is: someone who doesn’t have any choice in the matter. NDS doesn’t sell its DVR systems to consumers. Instead, it provides its technology to cable and satellite companies all over the world; those services then deploy it to their subscribers, in much the same way that cable companies already provide set-top boxes to users.

Although there are efforts at the FCC aimed at encouraging more manufacturers to enter the interactive television market, many industry watchers believe that most interactive TV devices will be rolled out through cable and satellite systems, rather than through consumer electronics retailers. This means that, in the future, we could all be provided with devices — like NDS’s, and unlike Tivo — that consider broadcasters, rather than viewers, their primary boss.

The major satellite systems in the U.S. already provide interactive TV and DVR systems to their users, and cable companies are rolling out such systems as well. In 2002, Scientific Atlanta, company that specializes in set-top box cable receivers, introduced a DVR device of its own. The system seems to have TiVo in its crosshairs. People who use the Scientific Atlanta system don’t have to pay an up-front fee for the DVR recorder; they just pay their cable system a monthly service fee of around $10.

Dave Davies, Scientific Atlanta’s director of business development, said that his company decided not to offer some features in its DVR box. “We don’t offer a 30-second skip button,” he said. “A consumer could fast forward [through the ads] but we don’t make it easy for them.” Davies also said that the box could be configured to not skip by certain ads, but that it doesn’t currently do that. “Could you do that? Yes. Is it in our system today? No. The real question out there is how much you inhibit what people can do — if satellite systems can skip ads then cable companies would need to have those capabilities too.”

Still, it’s clear that when your cable or satellite company gives you your set-top box — as opposed to your going out and purchasing it yourself — the service provider retains tremendous control over your system. Look at Sky TV, Rupert Murdoch’s satellite system. In the U.K., Sky TV offers the NDS-built digital recorder and satellite receiver to customers as an extra service, called Sky+. Unlike TiVo, the Sky+ system records “personal viewing information,” which is information about your viewing practices that is tied to your contact information (i.e., it’s not kept anonymous, like TiVo’s). A look at the Sky+ service’s privacy policy is chilling: “Unless you ask us not to,” the policy states, “we from time to time may send Personal Viewing Information to third parties that offer products or services that we believe may interest you or our customers in general for their use in providing digital satellite services to you via Sky+. Such third parties will be prohibited from using this information for any other purpose and they will be required to keep it confidential. These third parties may use this information to contact you.”

The privacy policies of cable and satellite systems in the United States are more stringent than those of Sky+. But it’s important to note, says White Dot’s David Burke, that the federal laws governing data collection from TV systems have some significant loopholes. “The most significant limitation is that [the law] only applies to cable operators,” stated a 2001 report on interactive TV by the Center for Digital Democracy. But interactive TV will transmit information over a number of platforms, not just cable. There are essentially no laws regulating data collected at your TV but sent over “phone lines, satellite links, wireless, and DSL,” the report says.

And recently, movie studios have been pushing through new efforts to limit the kinds of devices consumers can connect to their cable and satellite systems. In several states, the Motion Picture Association of America, the studios’ main lobbying group, has persuaded (or attempted to persuade) legislators to add new laws on the books to make it illegal to use certain devices that the MPAA believes could facilitate “theft” of cable and satellite TV services. Critics of the laws — who have taken to calling the proposed rules “Super-DMCA” laws, after the controversial federal Digital Millennium Copyright Act — say that the rules would force consumers to use only the set-top boxes that their cable or satellite providers give them, and would possibly prohibit third-party devices like TiVo.

Vans Stevenson, the MPAA’s senior vice president of state legislative affairs, described the laws as nothing more than an innocuous “update” to current theft bills. He said that attorneys at the group had determined that studios would need the state laws to protect some new services they planned to offer, including Movielink, a movie-on-demand system that movie companies recently unveiled.

Traditional critics of the movie studios’ copyright protection legislation, such as the Electronic Frontier Foundation, were blindsided by the MPAA’s state efforts. The EFF only found out about the MPAA’s laws after several states had passed them. “They know that people aren’t paying attention at the state level,” said Fred von Lohmann, an intellectual property attorney at the EFF. He and several other critics, including the Consumer Electronics Association, called the laws overly broad. Michael Petricone, the CEA’ vice president of technology policy, said that electronics companies were concerned that the new laws would prevent users from connecting even VCRs to their cable systems — a suggestion that Stevenson, of the MPAA, dismissed as “unfounded and bordering on the hysterical.”

The back-and-forth between the tech companies and movie studios continues in Arkansas, Colorado, Florida, Georgia, Massachusetts, Tennessee and Texas, where the bills are pending. But the studios seem to be facing some setbacks. One legislator who supported the MPAA’s bill in Michigan, where it was passed in December, recently told the Detroit Free Press that the law should probably be brought back to the Legislature to be clarified.

Fred von Lohmann, of the EFF, says he’s certain why the MPAA wants these laws passed. “I think the primary motivation is to get more leverage of the living room — they would love to be able to control what you can connect to your set.”

Will you like interactive television? That’s anybody’s guess. Interactive TV has so far been most successful in the U.K., and many of the services offered there sound nice, perhaps a bit fun, but certainly not essential. For example, MTV U.K. offers viewers the chance to “access up-to-the-minute celebrity news and gossip,” according to a press release from NDS, which built the interactive system. Or viewers can do this: “Enter a ‘personality quiz’ to discover whether they are more suited to Eminem or the Chemical Brothers. At the end of the quiz MTV adds up the score to decide. Viewers are given the choice of whether a particular artist or video stays on the MTV playlist.” The killer iTV feature in the U.K.? Choosing custom angles for soccer.

There are a couple of reasons why cable and satellite systems would like you to have interactive TV. First, the systems could provide them with significant new revenue streams. After the infrastructure has been rolled out, the systems could profit by offering multiple viewing angles or on-demand video for extra fees. The companies also hope that people will make impulse purchases from their TVs: You’ll see an ad for Domino’s Pizza and, unable to resist, you’ll order a pie right from your couch. The cable and satellite system will take a cut of this sale.

But broadcasters would also like interactive TV to get to know you better — much, much better. Many TV executives now believe that the days of the 30-second TV spot, the standard commercial length for decades, are numbered. What will replace these ads? Some people expect a return to the classic days of TV, when shows were sponsored by single companies (think Milton Berle’s “Texaco Star Theater”). But there’s a limit to how much money networks can make through product placement, and what we’re more likely to see, say experts, are custom long-form ads aimed at specific ZIP codes or even single households.

Dave Davies, of Scientific Atlanta, says that he envisions a future when you’ll see short ads, or links to ads (maybe in the form of a logo on the screen), that are targeted to you, but which then give a viewer the “the ability to telescope into a much longer version of the ad.” You’d see a short message for a new soda, your interest would be piqued, and you’d click on the ad to see some more. The system would be not very different, in other words, from the model of advertising we have on the Internet, but TV viewers could be much more receptive to ads, because the medium has been, historically, chockfull of commercial messages. And, again, viewers may not have any choice in the matter — you could be forced to see a certain ratio of ads to content.

A big debate in the incipient iTV industry is over how targeted the ads on the TV should become. Do advertisers need to know everything about you, specifically, or would they be satisfied with fairly bland demographic data — your age, income and ZIP code?

Kevin Noonan, the executive director of the Association for Interactive Marketing, an advertising trade group, says that the issues of precision — of how much advertisers should know about you — is an ethical one that needs to be addressed in society at large. Advertisers are loath to appear as if they’re invading our privacy, yet at the same time they see definite advantages in knowing certain facts about you. “If there’s a local Target in your area,” says Noonan, “they can address an ad to that constituency.” But Noonan says some advertisers may want to “get even deeper than that” — to know what ads you have specifically watched on TV, to know how you responded to those ads, and to send you new ads based on your previous actions and purchases.

David Burke of White Dot has two main fears about iTV. Privacy is the obvious one: Your private information, your viewing habits, shouldn’t be sent out to anyone and everyone in the world. Fortunately, however, customers tend to get outraged by such transgressions, and it’s reasonable to guess that, as occurred on the Internet, TV companies will take reasonable measures to protect your private data.

The bigger but more subtle problem, says Burke, is the targeted ads themselves. At least the way it’s currently practiced on TV, broadcast advertising is something of an inefficient business. Your ad gets seen by millions of people, most of whom are unlikely, for a number of reasons, to care about your product. But what if the advertiser could send each and every one of its potential customers a different ad, and promise each person something about the product that resonates specifically with him or her?

“Let’s take an example of launching a new brand of corn flakes,” Burke says. “What I can do now is do an explosive campaign. I can yell, ‘Corn flakes! Corn flakes!’ I can launch a blimp and light fireworks. That’s what TV advertising is today. But if I knew about you, I wouldn’t even really need a launch. I could say here’s a family, and I could identify that type. I can ask, What’s this guy’s attitude toward breakfast? And I can say, I want to change this guy’s attitude towards breakfast. So I’ll run this ad for a couple months — I’ll see how that works. They could show you special TV shows, they could send you special advertisements just for your type. The key is, they know you — and over time they work on changing you into one of their customers.”

What Burke says might sound out of this world, but it’s not, really. Trying to change people’s attitudes about a product is the core of good salesmanship, after all. The only reason advertisers can’t do it today is because they don’t know your attitudes — but if they did, wouldn’t they work on you?

“Where this gets dangerous,” Burke says, “is that corn flakes are not the only thing can sell. The whole idea of what democracy is that politicians make public statements. But the idea that a politician running for office can tell each person a different thing, can tell them what they want to hear — that’s a politician’s wet dream!”

“We are crossing a threshold we’ve never crossed before,” he continues, “in that we’re allowing people to watch what we do in our spare time, in our homes. The whole idea of a man’s home being his kingdom is enshrined in English and American law. Policemen are ingrained with the idea that the outside belongs to them but the home is off limits. And now, suddenly, we’re crossing that line.”

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