Opinion: Machinima screwed up big time, but disclosure is the key for the future

Warning: Pretty much all of this is opinion.  While I do use facts to support my opinion, just note that this is an opinion piece.

machinima_logoIf you’ve been on the internet in the past week, then you are likely up to date on the Machinima/Microsoft controversy.  If you haven’t, then this article I wrote yesterday should clear things up.  All of this business is quite concerning though, and it is being revealed that other game publishers, like EA, also have a CPM bonus for those who give coverage to their games.  While others like Total Biscuit, major Youtube pundit, and Erik Reynolds, a long time industry PR executive, have said these deals are not uncommon at all for Youtubers, but they each agreed that the way Microsoft and Machinima did this was both lazy and stupid.

To put it lightly, Machinima fucked up.  Apologies for my language, but their is no other way to say this.  The language in the contract they presented was completely illegal, and bold faced dumb.  Under FTC regulations released during 2013, Youtube videos that feature any endorsement or advertising must disclose that information.  That’s not just a suggestion, it’s the law.  Some can argue that the use of a certain tag could be considered disclosure, but that goes against the FTC once again, who say it cannot be hidden or “buried”.  One tag that is non-descriptive would be considered hidden.  To say otherwise is silly, so I’m just going to leave this as is.  Machinima did something illegal, got caught, and thankfully is now fixing it.

nbc logoThe real questions raised by this incident is how frequent is this advertising/sponsorship, and is it really that bad?  We have to examine a few pieces of evidence first before we can answer that though.  The first being the cost of the advertising.  Microsoft was offering an extra $3 per 1000 views on a video, with a cap of 1.25 million views in total being up for grabs in this promotion.  The total money spent by Microsoft on this promotion would have been a paltry $3750.  For EA’s, their Battlefield 4 promotion would allow for up to 20 million views and pay out $200,000 at $10 per thousand views.

Compare that to the cost of an NBC primetime advertising slot, which currently carries shows that only get about a 1.5 in the key demographics, (males 18-34, also a large portion fo gaming demographic) costs $87,716 for a 30 second spot.  You can understand why a company like Microsoft or EA would want to jump at a deal like they get with Youtube.  It’s a steal, and those videos have that positive content forever.  In comparison, you have to pay out for each time you air a commercial on TV.  Young creators on YouTube find an extra $25 bucks to be kind, or at least not negative, appealing and will likely jump at the chance.  There’s a reason that the promotion only last for two days.

brock lesnarThe second issues is the no negativity clause in this agreement.  It’s been shown that both known bonus CPM contracts have no-negativity clauses in them.  These are somewhat understandable clauses for an advertising agreement though.  I’ll use Bud Light’s sponsorship of UFC as an example.  In 2009, Brock Lesnar fought and beat Frank Mir in a brutal contest.  Lesnar emerged victories, and after the fight, Brock told the interviewer that he will be drinking Coors Light as Bud “don’t pay me nothing”.  Obviously this caused a snafu, as Coors is one of Bud’s biggest competitors.  Lesnar had to go on and apologize for his remarks, and was likely scolded by UFC management, as Bud is one of the largest and longest sponsors of UFC.

To make a comparison to gaming, this would be like EA offering this bonus, only for someone like Toby Turner to collect the money, while saying Battlefield 4 sucks, and he’s going to play COD.  It’d be illogical for the clause to not be included in the deal.  Sponsorship work when the person or show being sponsored puts the product over.  In House of Cards, if Peter Russo would have said he hated his PS Vita, and wanted a 3DS, then the advertising dollars Sony gave to the Netflix show would have been pointless (scene in question here).

For the record, their is no evidence that Game Grumps has ever taken money.  I just needed a popular channel for an example

For the record, their is no evidence that Game Grumps has ever taken money. I just needed a popular channel for an example.

The third and final issue to look at for this problem is was this wrong?  I’m going to assume for now that most videos that were made under these deals were for people who were going to be positive about the Xbox One or EA game anyway, and just made some extra cash doing so.  Is this wrong of them?  Probably not.  Many creators on Youtube make these videos either for extra cash, or as they hope to make it a career.  This extra money could certainly help many folks who are making this content that we all enjoy.

Unfortunately, this could create a conflict of interest.  Many folks find Youtube gamers to be like a friend that they are learning about a game through and that they can trust.  Many people trust the folks at Game Grumps, and take their opinion on many games into strong consideration when they think about buying it.  If Game Grumps was paid for a positive video on, let’s say, Killer Instinct, many may take that like they would a recommendation from a friend.

This conflict of interest was best shown by the clause in Machinima’s contract that explicitly prevent disclosure of this contract.  They could not talk about how they were paid extra for this coverage.  To go back to an earlier example, it would be like UFC having their ring covered in Bud Light logos, Bud Light be prevalent at many interviews, and they just had to play it off as they just loved Bud Light that much.

ftc logo

The FTC requires disclosure, and it is the key.

To bring things back together, I don’t find this advertising all that awful, but disclosure is the key.  I can almost guarantee that this kind of advertising is frequent among the Youtube game content creators, though most likely comply with FTC regulations, unlike the Machinima deal.  When it comes down to it, if these people are creating this content, they deserve to be paid.  The disclosure of extra ad revenue (beyond the ads Youtube runs) needs to become a normal though.  If you are doing a Let’s Play for a game because a company reached out and offered you additional money to do so, then you have to disclose that early in the video.  While your opinions in the video may be genuine, the viewer deserves to know.  When we see someone on a Soap Opera eating Cheerios, we know they were paid for it.  When video creators play a game though, we don’t know if they were paid unless they disclose it.

I think these types of sponsorships will only increase into the future, as Ad revenue becomes harder to come by due to adblock.  Plus, it’s far easier to cut out the middle man, but this raises risks of people seemingly getting paid for a review.  Thankfully, the FTC made this disclosure required, so it really all come down to companies not doing anything illegal.  Making money on coverage of a game isn’t, and shouldn’t be illegal.  For the most part, they aren’t journalists and nearly all never claim to be.  They do it for entertainment and money.  Don’t assume that these people are your friends giving you a recommendation unless you are sure they are not being paid.  The FTC’s guidelines are their for a reason, and that is to protect the consumers from fraudulent advertising.

Do you readers feel different?  Let me know your opinions on this entire issue below in the comments, and thanks for reading my rambling opinion.

by, Bobby Marquardt

For the record, we have never been paid for anything here.  If we are ever lucky enough to be paid for anything I promise you we will disclose it immediately.  Their is also no indication that Game Grumps, Toby Turner, or any Youtube creators mentioned here have been paid for their videos through deals similar to the Machinima/Microsoft one.  I just needed examples.  


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