If General Motors could zap ads directly to TV sets, it would undoubtedly promote different cars to different people: a minivan to parents with two kids, a convertible for the recent college graduate, an economy model for a low-income family.
New set-top boxes being developed by Canal Plus and Scientific Atlanta will allow advertisers to do that -- while giving consumers a measure of privacy they don't normally get from interactive television services.
The key is set-top software developed by Fremont, California's Metabyte Networks that filters ads, e-coupons and video-on-demand based on a household's demographics and viewing preferences. The information can then be stored on a TiVo or other personal video recording device for viewing at the user's pleasure.
"The profile and all the information an advertiser needs is stored only on the set-top box," said Vallal Jothilingam, Metabyte's co-founder and marketing director. "It never needs to leave the customer's home."
That's a big departure for the young interactive television industry, which is used to storing consumer information on servers. Cable operators get to decide how they want to use that information: to tailor programming, or to sell it to other companies.
The new technology "protects consumers' privacy," said analyst Jim Stroud of entertainment technology researcher the Carmel Group. "It helps build their trust."
As part of its adoption of the technology, Scientific Atlanta led Metabyte's most recent funding round, which the companies said has raised $10 million.
The technology isn't limited to filtering the ads that get to a consumer's TV. It will also be used to create interactive program guides that are automatically tailored to the consumer's viewing tastes.
Jothilingam said field trials of the technology will likely start in the second half of 2002.
Metabyte's software is closely tied to the introduction of a new generation of personal video recorders that will be able to store as much as 300 hours of programming and give users much greater control over how that programming is selected.
Advertisers, of course, still need to know who their messages are reaching, and Metabyte has developed an "opt-in" plan for cable subscribers who agree to upload their personal information to servers. Jothilingam said advertisers and cable operators will get figures gleaned from a cable population representing about 0.1 percent of all subscribers. Metabyte has partnered with Nielsen, whose rating system helps TV networks determine the popularity of their programming.
Interactive television remains a niche market. Most analysts believe widespread adoption by consumers is still several years away.
Privacy has been a major obstacle to "T-commerce," as it's called. All existing privacy protections rely on the operator creating trust with the consumer: The operator might promise, for example, that it will collect information about subscribers, but not their names; it might promise not to sell the information; or it might create opt-in systems similar to the one Metabyte is developing for future customers.
Given how little trust most consumers have toward their cable operators, a solution that allows TV viewers to store information on their own hard drive may come as a welcome alternative.
"We really believe that for interactive television to succeed as a medium, it has to be non-intrusive," Jothilingam said.
