Back in 2013, Machinima came under fire after being exposed of deceptive marketing for Xbox One. Machinima paid YouTubers a total of $30,000 to create videos that represent Xbox One and its launch title under a positive light.
During the early days of Xbox One and after Microsoft’s E3 2013 presser, things were not looking good for the console. The console was heavily criticised for its DRM checks every 24 hours, mandatory kinect to run Xbox One, no resale for used games, slightly less powerful hardware yet more expensive than PS4.
Xbox One desperately needed to escape from the negative kakoon Microsoft created around it so Machinima came to the rescue. Machinima paid YouTubers and provided strict guidelines from producing content. Moreover, the agreement Machinima had prohibited Youtubers from disclosing their videos as paid content, or ever discussing the terms.
Once the videos were produced, YouTubers needed a go ahead from Microsoft before publishing.
Machinima Settles without any Monetary Penalties
After 3 years, Machinima can finally put this behind it and move on to business as usual (whatever that may be). Unfortunately, there were no monetary penalties, Machinima got away with just a warning and orders of not to participate in such marketing tactics.
According to the FTC’s complaint, announced in September 2015, the California-based online entertainment network engaged in deceptive advertising by paying influencers to post YouTube videos endorsing Microsoft’s Xbox One system and several games.
The influencers paid by Machinima failed to adequately disclose that they were being paid for their seemingly objective opinions, the complaint alleges.
The final order settling the complaint prohibits Machinima from misrepresenting in any influencer campaign that the endorser is an independent user of the product or service being promoted.
Among other things, it also requires Machinima to ensure that all of its influencers are aware of their responsibility to make required disclosures, requires Machinima to monitor its influencers’ representations and disclosures, and prohibits Machinima from compensating influencers who make misrepresentations or fail to make the required disclosures.