The XB1M13 scandal was one of the biggest scandals of early 2014. It was a big fallout over the issue of disclosure and deceptive endorsements by the YouTube gaming community. Machinima had signed a deal with Microsoft to promote the Xbox One and various products via various YouTube network partners. The big issue was that in the contract the YouTubers were not required to disclose that the content was paid content. The FTC was quickly notified and began a thorough investigation.
In a press release published on the official FTC website, Jessica Rich, Director of the Bureau of Consumer Protection commented about the issue of paid endorsements without disclosure, stating…
“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,”
“That’s true whether the endorsement appears in a video or any other media.”
Machinima was charged with deceptive endorsement practices but they managed to settle with the FTC to avoid any hefty fines.
The FTC let Microsoft off the hook with a warning and stated that the company was quick to rectify the problem as soon as they were notified about the scandal last year. Microsoft cleaned their hands of the event just days after the XB1M13 scandal had been made public thanks to whistleblower Gametegrity who spoke about the leak with Adam Sessler and TotalBiscuit. Shortly thereafter the old media took YouTubers to task for it.
YOU SHOULD BUY AN XBOX ONE RIGHT NOW!!!!
According to the FTC, Machinima was paid a hefty sum – and in turn paid out a hefty sum to YouTubers – in order to promote the Xbox One and its games…
“Machinima paid two of these endorsers $15,000 and $30,000 for producing You Tube videos that garnered 250,000 and 730,000 views, respectively. In a separate phase of the marketing program, Machinima promised to pay a larger group of influencers $1 for every 1,000 video views, up to a total of $25,000. Machinima did not require any of the influencers to disclose they were being paid for their endorsement.”
The FTC has been used as a sword by the old media against the rising tide of YouTubers. However, gamers were not satisfied with just YouTubers being required to disclose financial ties and affiliate sponsors in their videos. Gamers took it a step further and organized campaigns to get the FTC to investigate websites where they were suspected of promoting affiliate products and endorsements without proper disclosure.
This campaign was done under Operation Baby Seal, one of the many operations organized by #GamerGate to fight corruption in the media industry.
#GamerGate also requested of the FTC to further explore more thorough guidelines for affiliate links, Let’s Play video disclosures and game review disclosures for both new media and old media alike. The FTC did update their guidelines following the #GamerGate campaign and made it clear that game reviewers in print, digital and video media are required to disclose any financial ties or affiliations with a product.
Some YouTubers still have troubles with disclosure, but for the most part gamers and consumers are being vigilant in ensuring that corruption is brought to its knees at the behest of those who believe in the establishment of consumer protection and justice for all.
Following the XB1M13 campaign, it’s unlikely that Machinima or Microsoft will try anything like that again. And with #GamerGate looming around every alleyway and corner within the gaming industry, you can bet your bottom dollar that anyone attempting to enact corrupt behavior will be thoroughly investigated and suffer the necessary recourse befitting their actions.
(Main image courtesy of Johnny Chase)
[Update: Slight correction was made about the whistleblower]