Los Angeles Business Journal

Machinima, Microsoft Deal Makes it Pay to Play

By Tom Dotan Monday, January 20, 2014

If you’re among the ranks of Machinima’s YouTube channels and you say something nice about the Xbox One in a video, Microsoft is going to make it worth your while.

So goes the offer circulating around Machinima, the West Hollywood YouTube network with a focus on gaming.

Any clip that includes at least 30 seconds of gameplay from an Xbox One game – plus a positive name-drop of the console – will net the maker $3 for every one-thousand views (a $3 CPM, in industry terms). The deal, terms of which were disclosed in a leaked email, officially began last week and continues until mid-February.

The Microsoft payout is considered a bonus on top of the regular earnings Machinima offers its member channels. In a community that’s been trying to eke out more ad dollars from a lagging market, it’s a welcomed, albeit controversial, perk. Recipients of the payment are not required to disclose the business relationship with Microsoft in their videos.

Details about the deal emerged from a leaked message, and the ethics of this stealth campaign have been openly questioned. As written in the legal fine print, for YouTubers to qualify for the deal they must keep the arrangement with Microsoft confidential, including the promotional requirements and amount of compensation. That could put it at odds with federal guidelines that demand open disclosure of paid-for content.

UPDATE: A spokeswoman from Machinima sent in the following statement:

This partnership between Machinima and Microsoft was a typical marketing partnership to promote Xbox One in December. The Xbox team does not review any specific content or provide feedback on content. Any confidentiality provisions, terms or other guidelines are standard documents provided by Machinima. For clarity, confidentiality relates to the agreements themselves, not the existence of the promotion.

Paid product placements -- done with more apparent disclosure -- have become increasingly common in the world of YouTube networks. Fullscreen in Culver City offers an amped-up CPM to creators though its “Gorilla” program, which matches talent with partner brands. The top personalities at Maker Studios frequently churn out branded content, such as a capella-meister Mike Tompkin’s “Take Me Out the Ball Game” video, sponsored by Pepsi.

This isn’t the first time Machinima has partnered with Microsoft. The Redmond, Wash., company previously co-produced Halo 4: Forward Unto Dawn, a Web-series based on the Xbox title that was distributed through Machinima Prime.

The last few months have been rocky for Machinima, once the ruling online video outlet. Recently it’s experienced a drop-off in monthly views and audible grumbling from its community of video makers. In November, network co-founder and Chief Executive Allen DeBevoise announced he was looking to step down and actively seeking a replacement.

(This article has been updated to clarify that Fullscreen's Gorilla program and Maker's branded content are fully compliant with Federal guidelines)