Adult entertainment aint what it used to be. Pay-per-view is losing ground to free internet downloads. This is a continuation of an historical trend: prostitution declined in the 1960s when changes in sexual mores reduced demand for paid services.
The decline is a significant blow to the industry; adult entertainment is highly profitable. Content providers are concerned that pornography is a bellwether. TV viewership is down across the board. If one of its most financially viable options is declining it could signal further erosion for the medium. One is tempted to suggest that this is a case of art following life: interactive is more attractive than is passive. JL
Sam Schechner and Jessica Vascellaro report in the Wall Street Journal:
Cable and satellite television companies have a pornography problem: Their customers aren't watching enough of it.
Companies' revenue from highly profitable adult video-on-demand and pay-per-view services has been slipping, as the genre's consumers spend more time browsing porn on the Web. The trend is prompting TV executives to pull back the curtain on how porn contributes to their businesses, a topic they have been loath to discuss publicly.
On Thursday, satellite provider DirecTV cited "lower adult buys" as a cause for weaker pay-per-view revenue in its second quarter earnings. That followed Time Warner Cable Inc.'s admission last week that shrinkage in the adult category was responsible for more than a third of a $14 million drop in video-on-demand revenue. While only a sliver of the cable company's $4.9 billion in revenue for the quarter, porn is one of TV providers' most profitable segments.
Other cable- and satellite-TV executives say they have been weathering the problem for years. "There's been a fairly steady trend over some time period now for adult to go down largely because there's that kind of material available on the Internet for free," Glenn Britt, Time Warner Cable's CEO, said on a conference call to discuss earnings results last week.
Adult TV's woes echo broader challenges that the television business is facing from Internet video. Distributors and TV networks, for instance, are talking about restricting next-day Web streaming of TV shows, which some executives believe eats into ratings and makes it easier for television viewers to become "cord-cutters."
"This should be a cautionary tale for the larger content community," one cable-TV executive said of the porn declines. "This content is devalued to our customers because of the alternative models."
Overall, cable, satellite and telecommunications companies that offer TV service brought in about $899 million in revenue from adult video-on-demand and pay-per-view in 2010, down from a peak of $1 billion in 2008, according to estimates from SNL Kagan. The research firm forecasts growth for cable and satellite providers in 2011 to be flat.
It is hard to get a fix on how much porn contributes to cable and satellite companies' bottom lines because the companies aren't transparent about it. But adult content has been a consistent source of profit, because cable operators have leverage to command margins that can exceed 90% on rentals of generally interchangeable porn movies, analysts say. "It's a relevant business simply because of its profitability," said Craig Moffett, a cable and satellite analyst at Sanford C. Bernstein.
Adult movies are often more expensive, too. Many adult movies cost $9.98 to rent on Time Warner Cable in New York, while Hollywood films often cost $4.99 to rent.
The porn-cable connection tumbled into public view when NBC's "30 Rock" mocked the dependence of Kabletown—a fictionalized version of NBC's then soon-to-be owner Comcast—on pay-per-view pornography, calling it "the goose that lays the golden eggs."
Comcast Corp. noted a slowdown in pay-per-view revenue on its second-quarter earnings call on Wednesday. A spokesman for the company declined to comment to what degree the pullback in adult content contributed to the decline.
"There is no question that free [adult] content is eating into cable companies' revenue," said Tom Hymes, senior editor at Adult Video News, a trade publication for the adult-entertainment industry, who says porn is more susceptible to competition from free Internet video than other types of TV because it is cheaper to produce and the quality matters less to some viewers. "There is just a glut of content, and a lot of it is available for free."
Online viewing of adult websites is growing. The average time spent during each visit to an adult site has grown 26% since 2008, to eight minutes and 35 seconds, according to Experian Hitwise, a unit of Experian PLC. Ten of the top 11 adult sites are video sites, which have seen their share of visits to all websites grow fourfold since then, Hitwise says.
Porn purveyors have seen the impact. Playboy Enterprises Inc., for instance, has seen its domestic TV revenue—which includes video-on-demand versions for Playboy TV and Spice, as well as traditional adult channels—fall significantly in recent years, from $75.8 million in 2007 to $44.4 million in 2010, the company's last report before going private.
Playboy said in a 2009 securities filing that the results "reflect consumer migration to Internet-based adult options" and that they expected the trend to continue. A spokeswoman for the company said no one was available to comment.
When cable and satellite providers moved to start airing hard-core porn in the early 2000s, the business grew quickly because it faced little competition, said Vivid Entertainment co-chairman and co-owner Bill Asher. "It was found money" for cable companies, he said. "It was the dirty little secret that nobody talked about."
Now Mr. Asher says cable providers must adapt to compete with the Internet—offering more competitive prices and more exclusive content, such as celebrity sex tapes. He said Vivid plans to launch new TV offerings in coming months with that in mind.
"I don't think you want to get down in the trenches and slug it out with cheap porn on the Internet," Mr. Asher said. "Our job is to come up with unique, interesting content, not just more of what's out there."
3 comments:
Hello. Good post. I agree with this information and I think that it is normal. With our modern digital technologies and internet, many people prefer to watch porno via internet. There are many free sites for this purpose. For example I use xossipy to relax, very good website!
Great post!
It happens. And it's okay if your sex life is spiraling. But it’s not okay if you don’t know about it or are too shy to take the initiative. As partners, knowing how important a healthy sex life is to a thriving and vibrant relationship and not doing anything about it is the first reason you are already losing interest in your relationship.
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