×
You will be redirected back to your article in seconds

Machinima Settles FTC Charges Over ‘Deceptive’ YouTube Videos Touting Xbox

Machinima has agreed to disclose when it’s paying YouTube creators to endorse products, settling an investigation by the Federal Trade Commission about the multichannel network’s promotional videos for Microsoft’s Xbox One system and games.

Machinima and YouTube “influencers” were part of an Xbox One marketing campaign in 2013 managed by Microsoft’s advertising agency, Starcom MediaVest Group, according to the FTC. Machinima guaranteed Starcom that the influencer videos would be viewed at least 19 million times, according to the agency — however, the MCN failed to adequately disclose that the YouTubers were being paid to tout Xbox, per the FTC complaint.

“When people see a product touted online, they have a right to know whether they’re looking at an authentic opinion or a paid marketing pitch,” said Jessica Rich, director of the FTC’s Bureau of Consumer Protection. “That’s true whether the endorsement appears in a video or any other media.”

In a statement, Machinima said, “Machinima is actively and deeply committed to ensuring transparency with all of its social-influencer campaigns. Through collaboration with the FTC, we are pleased to have firmly resolved this matter, related to an incident that occurred in 2013, prior to Machinima’s change of management in March 2014. We hope and expect that the agreement we have reached today will set standards and best practices for the entire industry to follow to ensure the best consumer experience possible.”

In March 2014 Machinima hired Chad Gutstein, formerly COO of independent cable network Ovation, to be its CEO. He joined after chairman Allen DeBevoise stepped down as CEO several months earlier.

According to the FTC, in the first phase of the marketing campaign, a small group of influencers were given access to pre-release versions of the Xbox One console and video games in order to produce and upload two endorsement videos each.

Machinima paid two YouTubers $15,000 and $30,000 for producing You Tube videos that generated 250,000 and 730,000 views, respectively, the agency said. In a separate phase of the marketing program, Machinima promised to pay a larger group of influencers $1 for every thousand video views, for up to a total of $25,000. Machinima didn’t require any of the influencers to disclose that they were being paid for their endorsement.

The FTC also said it has sent a letter to Microsoft and Starcom closing its investigation into the two companies in this case. According to the agency, while Microsoft and Starcom both were responsible for the influencers’ failure to disclose their material connection to the companies, FTC staff considered the fact that these appeared to be isolated incidents that occurred in spite of policies and procedures designed to prevent such practices. The companies also quickly required Machinima to remedy the situation after they learned that Machinima was paying influencers without making the necessary disclosures.

More Biz

  • US Capitol

    The Sneaky Long Game of ALI’s Restatement of Copyright (Guest Column)

    Last week, Senator Thom Tillis and four other members of Congress sent a letter to an organization you may never have heard of, the American Law Institute (ALI).  The letter questions the ALI’s ongoing project to publish a competing version of the Copyright Act – or, as the ALI calls it, a “Restatement” of copyright [...]

  • Tom Petty’s Daughters, Widow Settle Legal

    Tom Petty’s Daughters, Widow Settle Legal Battle Over Estate

    Tom Petty’s widow and daughters from a previous marriage have settled their bitter legal battle, according to a report in Rolling Stone. Earlier this year, Adria Petty and Annakim Violette, the late singer’s daughters with his former wife Jane, sued his second wife, Dana York, for $5 million, alleging that she had deprived them of [...]

  • Tropical rainforest on the banks of

    Warner Music Aims to Plant 100,000 Trees in the Amazon as Holiday Gift to Staff

    In a move that inspired and environmentally conscious companies will hopefully emulate, as a holiday gift to its employees, Warner Music Group is partnering with the One Tree Planted organization to plant trees in the fire-ravaged Amazon forest. The company is planting 10 trees in the Amazon for each employee — a total of 48,210 [...]

  • Republic Records Names Chris Blackwell Senior

    Republic Records Names Chris Blackwell Senior VP of Creative Content

    Republic Records has named Chris Blackwell senior vice president of creative content & development, it was announced today by co-founders Monte and Avery Lipman and general manager Jim Roppo. According to the announcement, Blackwell will lead creative development for film, television and premium platform projects set to feature and showcase Republic Records artists. His responsibilities include establishing partnerships to create, develop, [...]

  • China Spying Technology Tik Tok Placeholder

    TikTok Gains Global Momentum -- but Also Raises Sticky Privacy Questions

    Bay Area rapper Saweetie didn’t intend for “My Type” to come out as a single. But when a clip of the bouncy anthem about desirable (and slightly vulgar) attributes in a partner started to take off on TikTok as part of a social media challenge, it became clear the song would be her defining hit. The [...]

  • Carlyle Group, Investors in Taylor Swift

    Carlyle Group, Investors in Taylor Swift Catalog, Address Scooter Braun Drama (Sort Of)

    Kewsong Lee, co-CEO of The Carlyle Group, a private equity fund whose assets include a minority investment in Big Machine Label Group, the record company that’s home to Taylor Swift’s catalog, spoke to CNBC’s “Squawk Alley” on Wednesday. During the interview, held at the Goldman Sachs Financial Conference, host Wilfred Frost asked the business executive [...]

  • Mergers and Deals Placeholder

    Top 19 Media Trends of 2019: Mega Mergers

    Media consolidation has been rife in the past two years, as traditional media companies have scaled up in order to protect themselves against the new entrants challenging their business.  Traditional media has spent $229 billion since March 2018 on just six key mergers as rivals opted to combine their assets to compete in the new [...]

More From Our Brands

Access exclusive content