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Machinima settles with FTC over its deceptive Xbox One advertising

If you’ve been an avid gamer, and consumer of related online content over the past decade, it’s likely you know of the multi-channel network, Machinima. The video game and nerd culture focused network, is both a content creator, and curator of many large video producers. The site has offered editorials, news, and previews over its 15 years of existence, and been a platform where many individuals have flourished, and found support to create their content.

Today the Federal Trade Commission have exposed a group of their content creators that were paid to promote the Xbox One, and did not disclose that these promotions were being funded by Microsoft, in collaboration with Machinima. Machinima have agreed to settle the FTC's charges that they were involved in a misleading marketing scheme with Microsoft. Details of the contract first arose early last year, two months after the console launched in 13 markets.

The FTC has stated that two YouTuber’s under guidance from Machinima were set to be paid a sum of $45,000 between them, to create content which promoted the newly announced Xbox One console, and hit pre-decided goals for video views. The content produced followed strict guidelines outlined in the agreement, which had to be met to receive the offered endorsement. Machinima also reportedly paid a large group of content creators up to $25,000, at the rate of $1 per 1000 views, to promote the console, with no requirement to disclose the agreement.

A California-based online entertainment network has agreed to settle Federal Trade Commission charges that it 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, Inc., failed to adequately disclose that they were being paid for their seemingly objective opinions, the FTC charged.

Instructions sent to Machinima’s content creators listed strict rules regarding content produced for this promotion, proposing that videos included certain positive comments about the console and Microsoft, paired with specific gameplay.

In the future, the FTC has prohibited Machinima from attempting this ‘deceptive conduct’ again, and now full disclosure is required for any future agreements. Microsoft on the other hand is no longer being investigated, after they took ‘swift action’ to clear up confusion, and rectify the situation before it progressed further.

Commission staff considered the fact that these appeared to be isolated incidents that occurred in spite of, and not in the absence of, policies and procedures designed to prevent such lapses. The companies also quickly required Machinima to remedy the situation after they learned that Machinima was paying influencers without making the necessary disclosures.

Microsoft stated in January 2014 that they did not know the details behind the contract, and attempted to clean up the negative backlash surrounding the promotion, soon after the details arose.

This incident is yet another reminder that many companies attempt to increase their sales using drastic means, even if lying or deceiving the consumer in the process. Whether some of the agreements made with content creators were planned to be made as secretive as they turned out, will likely never be known, however the intention is still clear. These schemes are highly effective, by targeting content creators relatable to the market, who can cast a point of view upon their audience.

Source: FTC via IGN| Image: Shutterstock

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