NUads will not use data captured by Kinect for advertising purposes, Microsoft has insisted.
Natural user interface ads (NUads), which launches in late spring, uses Kinect to make ads interactive, and thus encourage people to watch them rather than skip them. Microsoft predicts a revolution in advertising.
But some are concerned about privacy issues because NUads uses Kinect to record and compile biometric data on users.
Microsoft said it takes privacy seriously and denied any wrongdoing. "With respect to privacy, Xbox 360 and Xbox Live do not use any information captured by Kinect for advertising targeting purposes and NUads is no exception," reads a statement issued to CNET.
"Microsoft has a strong track record of implementing some of the best privacy protection measures in the industry. We place great importance on the privacy of our customers' information and the safety of their experiences."
NUads is a new set of features that allow marketers to place interactive Kinect-friendly advertising on the Xbox 360 dashboard.
You'll be able to post messages about an ad to your Twitter feed by bellowing "Xbox Tweet" at your Kinect unit.
If you want to find out more about a product being thrust in your face, shout "Xbox More" and you'll duly receive an email filled with product info.
If it's a TV show being promoted, you can yell "Xbox Schedule" and you'll receive a text message reminding you when the programme airs. Or if it's a specific product, saying "Xbox Near Me" will give you a map showing the nearest store to your location that the item is being sold.
Advertisers will be able to ask users to vote in polls by asking you to wave your hands in front of the Kinect camera to select, say, your favourite pizza topping.
Microsoft manager Lyn Watts expanded on the potential for NUads at the PII conference (attended by CNET).
"During the Super Bowl, you're watching TV, some great ads pop up," Watts said. "You say something like, 'Xbox share,' it'll share automatically, on Facebook or Twitter, whatever you like. Advertisers are really impressed by this.
"The innovation that we're seeing is absolutely incredible."
Contradicting Microsoft's statement, Watts went on to explain how NUads may tailor advertising using data gathered by Kinect.
"How many people are in the living room? Are they taking any action based on the advertising they just saw?" Watts said. "Can we watch the customers' reaction, and if we can, do we have the capability of showing a different ad, or the same ad, depending on what the reaction was?"
He suggested Kinect developers pay attention to privacy. "Make sure you do full disclosure," he suggested. "Make sure on the back end you know what you're going to do with your data."