In an interview on StickTwiddlers, a Microsoft employee explained how advertising has been incorporated into the Xbox One, especially with Kinect. They argue that advertising is actually an integral part of the Xbox's UI and design, and intend to make it a more enjoyable experience for consumers.
With that in mind, they're switching from traditional banner advertising on the Xbox 360 to native advertising. Simply defined, native advertising is advertising incorporated into the content. This is already common online, examples of which being promoted search results on search engines and promoted Tweets on Twitter. These ads are often targeted, meaning they've been selected for the consumer based on their likes.
Xbox 360 already does such targeted advertising, using basic user information such as age and brand engagement. However, the Xbox One offers Microsoft opportunities to improve data collection for this targeting with all the information collected by the console, including Kinect. Data accumulated over time, as well as more nuanced use of the technology on hand, will improve this targeting.
Microsoft stresss there are limitations to what data they can collect. For example, they won't have access to biometrics data, although 3rd party devs will to use on their games via an API. An example of data they will be using is facial recognition and counting the number of people in the room. This information will then be used to serve advertisements targeted towards families, gamers, couples, depending on who is detected in the room.
Finally, Microsoft assures that all advertising will go through them to ensure user safety. In fact, all planned Xbox One advertising will have to be made compatible with both their controllers and Kinect. Overall, they are trying to make the case for advertising on the console to be a more enjoyable experience than on the 360, or even other ad platforms.
While it's true that there's an opportunity to make Xbox advertising a better experience, one has to question why Xbox has to have so much advertising in the first place. Consider this a caveat emptor for those interested in buying.
