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The FTC Says Warner Bros. Hid Its Sponsorship of YouTube 'Shadow of Mordor' Videos

According to the FTC, Warner Bros. failed to ensure that influencers and video makers would "clearly and conspicuously" disclose that videos they made were actually paid advertisements.

by Austin Walker
14 July 2016, 4:00am

Image from 'Middle-Earth: Shadow of Mordor' by Warner Bros. Interactive Entertainment

You can find some of the best, smartest, and funniest stuff about games on YouTube. Over the years, the site has seen the rise of personalities who play and review games with verve, insight, and humour, and who have amassed some massive fan bases thanks to their unfiltered impressions. Unfortunately, we now know for sure that in some cases, those impressions weren't as unfiltered as they may have seemed.

On Monday, July the 11th, the Federal Trade Commission (FTC) announced that it had reached a settlement with Warner Bros. Home Entertainment after the entertainment giant was charged with paying an undivulged number of YouTubers anywhere from hundreds to tens of thousands of dollars to create promotional videos for the company's 2014 game Middle-earth: Shadow of Mordor. On its own, there's nothing wrong with that—but the FTC says Warner Bros. failed to ensure that these influencers properly disclosed the fact that they were being paid for their videos. In total, this campaign generated more than 5.5 million views, 3.7 million of which came from Felix "PewDiePie" Kjellberg, whose audience of 46 million subscribers is the largest on YouTube.

What did Warner Bros. get for its money? Each video that was part of the Shadow of Mordor campaign was required to meet five criteria: to show gameplay, to include "a strong verbal call-to-action" to click the link to the game's page in the video description, to "promote positive sentiment," to avoid showing any bugs or glitches, and to abstain from communicating any "negative sentiment" about the game or its developer. On top of that, each influencer was required to make one Facebook post or tweet about the game. These videos, in other words, were pretty much ads.

Sponsored content deals like this happen all the time, both in the YouTube gaming community and beyond, and the FTC's goal isn't to stomp them out. Instead, it aims to make sure that the audience is informed and can come to their own conclusions.

"Consumers have the right to know if reviewers are providing their own opinions or paid sales pitches," Jessica Rich, the director of the FTC's Bureau of Consumer Protection, said in a press release. "Companies like Warner Brothers need to be straight with consumers in their online ad campaigns."

The FTC requires that the video makers include what they call "clear and conspicuous" disclosure of any material connection between the YouTuber and any involved party. This commonly appears as text in a video title or as a spoken or textual display in the video itself.

Instead of demanding steps like these from its sponsored YouTubers, Warner Bros. merely required them to include mention of the sponsorship in the bottom half of the video's info box, appearing "under the fold", where the vast majority of viewers wouldn't see the disclaimer. In some cases, the FTC found that YouTubers only disclosed that they'd received early access to the game, entirely leaving out that the video was paid content. Since Warner Bros. pre-approved each video before it went live, the company can't even plead ignorance.

Image from 'Middle-Earth: Shadow of Mordor' by Warner Bros. Interactive Entertainment

As part of a settlement with Warner Bros., the FTC has proposed an order to prohibit the company from "misrepresenting that any gameplay videos disseminated as part of a marketing campaign are independent opinions or the experiences of impartial video game enthusiasts," and requires the company to ensure that proper disclosures are in place during any future campaigns. While the public shaming isn't a great look for Warner Bros., this also feels a bit like a slap on the wrist—after all, wasn't the company required to do both of those things before it was caught red-handed?

There has been some discussion about whether the FTC's announcement for this settlement and the media coverage that has followed has put an undue focus on PewDiePie's inclusion among the group of influencers paid by Warner Bros. On one hand, Kjellberg is the only YouTuber called out by name in any of the FTC's messaging. In a video response posted Wednesday, he argued that he was at least one of the influencers who included the text mention of sponsorship "below the fold," that his video wasn't a "review," and that his recent disclosure practices have improved. At the same time, though, 3.7 million of the 5.5 million views that the campaign received came from PewDiePie—so it isn't like some attention isn't warranted. And whether he calls a video a review or not, the video certainly was neither fully "independent" nor "impartial."

All of this signals the degree to which games coverage is changing. Audiences have wised up to banner ads and pop-ups—or simply stamp them out with adblockers—so branded and sponsored content has spread everywhere. At the same time, sites like YouTube and Twitch have democratised distribution platforms and made it possible for independent operators like PewDie to become genuinely powerful and influential figures in the gaming world.

Independence is often good—it allows people to pursue passion projects, experiment, take risks, and speak truth to power. YouTube personalities aren't part of the Establishment, which ironically both boosts their credibility with fans and makes them attractive vessels for companies who want positive coverage.

But independence has its downsides—especially in a field where sponsored content is often the only way to make a decent living. Say what you will about traditional media operations, but they usually have a wall between the salesmen and the journalists to make sure there's a standard of objectivity in place. But streamers and video makers need to play both of those roles, and countless others, in order to succeed. On top of being just plain exhausting, this also exposes them to risks that a more traditional outlet's structure could shield them from. The independent game journalists and influencers who do great work on YouTube often do so without the safety nets of (for instance) legal counsel or editorial mentorship.

In his video response to all of this, PewDiePie refused to give outlets like Polygon and the Verge quotes because he doesn't need them to deliver his message—he has his own audience. He's not wrong—but that's exactly the reason why the community of independent influencers needs smart, clued-in oversight, and why companies like Warner Bros. need to be kept in check when they attempt to bend the rules.

@austin_walker