Guys, this isn't advertisement. Advertisement would imply that the viewer knows that the company that owns and sells the product (Microsoft and the Xbox) are openly paying to endorse and promote their products. What is happening here is a form of propaganda, whereby the company secretly enlists what are thought to be independent 3rd party sources (Machinama youtube personalities in this case) to promote the product without disclosure of funds, to influence their viewers to get the product.
Remember the scandal a few years back when known video game critics left their sites and fully admitted that their reviews were skewed by advertisement funding, access to early review copies, and pressure within the companies? The situation is not unlike this.
And there is a reason why there is pressure on politicians and companies to disclose how much of their funds are coming from where.
Those of you chalking up any controversy this is generating to angry "sony poneys"or the like need to grow up and realize that console wars are for small children with nothing better to do. This is a matter of credibility and would apply to both companies; you can fight over who has the smaller wang elsewhere.
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They did though. Microsoft released a statement saying that the deal Machinima made with its partners- that the Youtubers would make a bonus for plugging the Xbox- was not one that they had any knowledge of. Microsoft payed Machinima for advertising, probably intending something more traditional like an obvious promo in the video or a banner ad, but Machinima used that money differently it seems. It appears the video producers failed to indicate that what they were doing was payed advertising.
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Thank you.