FTC Says YouTube Gamers Didn't Adequately Disclose Payments -- Update
July 11 2016 - 3:14PM
Dow Jones News
By Austen Hufford
The Federal Trade Commission said Time Warner Inc.'s Warner
Bros. Home Entertainment didn't require users of YouTube, including
the very popular channel PewDiePie, to properly highlight they were
paid to promote a Warner Bros. videogame.
The FTC said Warner Bros. paid an advertising agency to create a
so-called "YouTube influencer campaign" for its 2014 game "Middle
Earth: Shadow of Mordor." Popular YouTube users agreed to create
positive videos about the game -- including by not showing glitches
-- and to promote the videos on social media in exchange for as
much as tens of thousands of dollars.
Paying the YouTube users wasn't the problem. The FTC says Warner
Bros. didn't go far enough in requiring the users to disclose they
were being paid.
Over the course of the campaign, the sponsored videos were
watched 5.5 million times, the FTC said. One video in question,
produced by YouTube Channel PewDiePie, has reached 3.7 million
views as of Monday.
The nearly seven-minute gameplay video doesn't disclose Warner
Bros. paid for its creation in the video itself. In the text-box
description of the video, it states that the content was sponsored
by Warner Bros., but that is only if a user clicks on the "show
more" button.
The FTC said that the text-box disclosures didn't go far enough
and that as a result, viewers were "unlikely" to realize that a
video was sponsored.
"Consumers have the right to know if reviewers are providing
their own opinions or paid sales pitches," said Jessica Rich,
director of the FTC's Bureau of Consumer Protection.
In a proposed settlement with Warner Bros., the studio would
agree to make such disclosures in the future and to not
misrepresent that sponsored content is the independent views of
videogame enthusiasts.
Warner Bros. said it "always strives to be transparent with our
customers and fans when working with social influencers" and is
committed to complying with FTC guidelines.
According to YouTube's paid product placements and endorsements
policy posted online, users must notify YouTube that a video is
paid for, but they don't necessarily need to notify viewers.
YouTube instructs users to comply with local laws regarding
disclosures and points them to an FTC website.
YouTube is owned by Alphabet Inc.'s Google.
YouTube and PewDiePie didn't immediately respond to requests for
comment.
Videos of people playing videogames and providing running
commentary as they play have become extremely popular. PewDiePie,
who is one of the most popular YouTube users of that type, has more
than 46 million subscribers.
In 2014 Walt Disney Co. bought online-video network Maker
Studios, which distributes PewDiePie videos, for $500 million in
cash and up to $450 million dependent on performance targets.
Meanwhile, Amazon.com Inc. in 2014 bought Twitch Interactive
Inc., a popular internet video channel for broadcasting, and
watching, people play videogames, for about $970 million in
cash.
Write to Austen Hufford at austen.hufford@wsj.com
(END) Dow Jones Newswires
July 11, 2016 14:59 ET (18:59 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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