Report: Microsoft Paying Machinima Youtubers For Xbox One Mentions


UPDATE: Microsoft and Machinima have made a joint statement on the matter:

This partnership between Machinima and Microsoft was a typical marketing partnership to promote Xbox One in December. The Xbox team does not review any specific content or provide feedback on content.  Any confidentiality provisions, terms or other guidelines are standard documents provided by Machinima. For clarity, confidentiality relates to the agreements themselves, not the existence of the promotion.

A further statement from Machinima, on the topic of channels not making it clear they were being paid to promote the Xbox One, said, “That didn’t happen here and we’re evaluating why. All participants are being asked today to include our standard language going-forward. We apologize for the error and any confusion.” Although, seeing how the same type of agreement was promoted to Machinima content creators near the launch of the Xbox One, the repeated lack of disclosure is concerning.

ORIGINAL: There was speculation over the weekend that Microsoft was teaming with Machinima to pay their partners an extra $3/1,000 views for videos that positively mention the Xbox One (up to 1.25 million views) on top of their regular wages. However, seeing that advertising deals happen all the time in this industry, there was not much of a story to go on other that wouldn’t have to make leaps in morality to justify.

That all changed when Ars Technica released a report saying that not only is this true, but Machinima partners cannot informer their viewers that they were paid to promote the Xbox One. According to them, a leaked legal agreement reveals that not only can those Machinima partners who agree to this deal not speak negatively about the Xbox One or their company, but cannot publicly disclose that they are being paid for their endorsement.

With that in mind, such an agreement would be against Federal Trade Commission regulations as, “A connection between the endorser and the seller of the advertised product that might materially affect the weight or credibility of the endorsement,” must be fully disclosed. In fact, in Section 255.5, “Disclosure of material connections,” explicitly lists an example within the video games industry that details the illegality of not informing viewers of full disclosure.

From the FTC guidelines. Bold emphasis is mine:

A college student who has earned a reputation as a video game expert maintains a personal weblog or “blog” where he posts entries about his gaming experiences. Readers of his blog frequently seek his opinions about video game hardware and software. As it has done in the past, the manufacturer of a newly released video game system sends the student a free copy of the system and asks him to write about it on his blog. He tests the new gaming system and writes a favorable review. Because his review is disseminated via a form of consumer-generated media in which his relationship to the advertiser is not inherently obvious, readers are unlikely to know that he has received the video game system free of charge in exchange for his review of the product, and given the value of the video game system, this fact likely would materially affect the credibility they attach to his endorsement. Accordingly, the blogger should clearly and conspicuously disclose that he received the gaming system free of charge.

If this is the case, clearly what Machinima, in conjunction with Microsoft, is doing is against FTC regulations and goes against marketing integrity. Forcing participants to lie by omitting relevant details of paid advertising leaves viewers ignorant to the true purpose of the intentions of their Youtube content.

Content creators would be lying to their audience by providing positive Xbox One feedback in exchange of as much of that $3,750. Those who have growing audiences trying to break through into a full-time career can greatly benefit from this extra cash, and having the tags difficultly hidden from public viewership (Youtube’s design fault, not Machinima’s) means that it is very difficult to look up who has already participated in this promotion. It gives incentive to as many people as possible to take part, meaning more positivity towards the Xbox One brand due to sheer numbers.

It is unknown just how the executives at Machinima are benefiting from such a promotion, but it doesn’t make sense for them to orchestrate such a partnership without something in return. Microsoft’s end of the partnership is still unknown, however they are still part of this shady business.

The number one thing online advertisers will say that throws a wrench in their way is Adblock. No longer will their marketing budgets pay for viewership on specific channels and get everyone viewing said content to see their ads. Getting around such roadblocks is just the way of the marketing life. Paying Youtube content creators to promote your product with in-video ad features is one way of getting around this. It is what keeps Rev3 Games afloat on Youtube. It is an ethical approach.

Instead, what is happening is an attempt to deceive viewers at their expense of chasing extra money.

This is just my take on the subject. We’d like to hear from you, GameSiders, on this story. Is Microsoft just doing their best in order to market their product, or have they gone too far? Leave us a comment below.

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Tags: Machinima Microsoft Video Games Xbox One