FTC Says Gaming Media Giant Machinima, Inc. Must Disclose Paid Promotions

It’s not a great day to be an Xbox One owner.

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Mar 17 2016, 4:06pm

Image: Flickr/Daniel Lee

Machinima, Inc., the vintage video game site that morphed into a cross-platform online juggernaut, must now disclose when it compensated "influencers" on YouTube for promoting products without explicitly saying that the ad was paid for, thanks to a Federal Trade Commission order.

According to an FTC complaint from 2015, Machinima, Inc. paid "influencers" to post YouTube videos promoting the Xbox One and several games. Machinima, Inc. reportedly called these "influencer campaigns," but the FTC preferred the label "deceptive advertising." According to the complaint, two of these influencers were paid $15,000, and $30,000, respectively.

Now, after the FTC's comment period has closed, the final order for Machinima, Inc. prevents the company from passing paid campaigns off as objective opinions from influencers, and requires it to inform all influencers of their duty to inform their audience about the nature of the promotion.

It's no secret that Microsoft's Xbox One has seen better days. As the console continues to be outstripped by the competition in terms of sales, Microsoft has tried all sorts of things to boost lagging numbers: making the system compatible with Xbox 360 games, for example, and allowing players to game online with Playstation 4 owners—Xbox One's main competition.

The FTC also found Microsoft and its advertising firm, Starcom, to be responsible for the lack of disclosure in Machinima, Inc.'s influencer campaigns, but ultimately decided that the lapses were isolated incidents. The FTC requires social media users to disclose when they are being compensated to advertise a product in any way.

As a casual gamer and Xbox One owner, none of this is making me feel any better about my choice in console.