FTC and Machinima Settle on Deceptive Xbox One Advertising

Even before launch, the PS4 was the favorite of the three next-gen consoles, and even going by press hype alone they had a gigantic edge, ignoring the pre-order numbers. While Microsoft has turned things around nicely for the Xbox One since then, at the time, they were looking for some edge—any edge—to make the game a little more competitive.

Enter Machinima. Machinima, as you know, is a publisher rather than a producer; they don’t make their own videos, they give other people a well-known platform to publish their videos and take a cut of the profit produced. Well, Machinima entered a secret deal with Microsoft in the weeks before the launch, and their clients were informed that they would get bonus pay if they produced videos that spoke favorably of the Xbox One. The catch was that they could tell no one of the deal, which, as you know, is kind of illegal.

And the FTC jumped on it.

The Federal Trade Commission had been investigating the ad campaign, and then took Machinima to court over it. But today, they officially announced via a press release that they came to an out-of-court settlement with Machinima that will prevent them from doing something like this again. From the report:
 

“Under the proposed settlement, Machinima is prohibited from similar deceptive conduct in the future, and the company is required to ensure its influencers clearly disclose when they have been compensated in exchange for their endorsements.”

The report goes into the details of this secret deal in length, and I have to say, the payouts were pretty dang sweet. SkyVSGaming got paid $15,000 for two videos, and TheSyndicateProject got twice as much for the same number of videos. They also went into the kind of specific details each producer needed in their videos: a montage of Xbox 360 games, features they were looking forward too, and an announcement that they would be playing Ryse early. Why Ryse? Why not?

Either way, it’s nice to see the FTC doing something about this kind of deception, and that this will be the last time we should see Machinima sell itself out. It’s worth pointing out, by the way, that Microsoft wasn’t directly responsible for this; their ad agency, StarCom, was the force behind the deal. That’s not saying Microsoft was unaware, or even the ultimate mastermind, but… this all could have technically been done without Microsoft’s consent.

Still. Nice catch, FTC. Keep up the good work.