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Apr 19, 2018

Xbox controller

Who hasn't heard of Xbox One, right? Well, that didn't happen overnight. Once upon a time, the Xbox One was just an upgrade in the mind of Microsoft, and they needed someone to help them make the big reveal. And who better to help with the announcement of a new gaming platform than gamers? Enter Machinima, "the most notorious purveyor and cultivator of fandom and gamer culture" (aka a video entertainment company that produces and distributes content relating to video games and gaming culture).

In order to facilitate the announcement of the Xbox One, Machinima split the campaign into two phases. In the first phase, Machinima recruited five gamer influencers to create and upload two video reviews each of the Xbox and certain games. Machinima reviewed and approved all of these videos after they were uploaded to YouTube. In phase two, Machinima recruited members of its entire network of influencers to produce and upload videos. It paid them $1.00 for every 1,000 video views up to a cap of $25,000 per Influencer.

So Machinima had some influencers posts videos about the Xbox One, what's the big deal? The problem is that Machinima did not require the influencers to disclose that they had received compensation, so many of the influencers did not include disclosures - the FTC said this was deceptive. As you'll know from our earlier post, the FTC is particularly worried about consumers being misled, so they added on to the basic rules they came up within the Sony case. Here's where the FTC rules stood after Machinima (again, these rules are added to by later cases):

  • Don't make misrepresentations about any feature or capability of your product
  • Don't say your product can do something unless it actually can
  • Don't make misrepresentations in an influencer campaign that an influencer endorsing your product is an independent user or ordinary consumer if they're not
  • Don't make representations about someone endorsing your product unless you clearly and prominently let consumers know that you have a material connection to them (what does this mean exactly?
  • Do include clear and prominent disclosures of any material connection between the influencer and your company in an influencer campaign
  • Do take reasonable steps to take down endorsements that violate the rules
  • Do take reasonable steps to comply with the above requirements - what are reasonable steps according to the FTC? Establish, implement, and maintain a system to monitor influencers' statements and disclosures (so you catch any potential issues before they become real issues).

Jon Pfeiffer is an experienced entertainment and copyright trial attorney practicing in Santa Monica. Jon is also an adjunct professor at Pepperdine University in Malibu, California where he teaches Media Law. COM 570 covers First Amendment issues as well as copyright, defamation, and privacy.

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