Adult film companies, websites diversify to stay relevant

As technology expands and the recession takes its toll, adult film companies and websites are diversifying in order to stay viable and relevant.

During the 2012 AVN Adult Entertainment Expo and Adult Novelty Expo that runs through Saturday, an estimated 20,000 people will walk through the doors of Las Vegas' Hard Rock Hotel. Last year, the convention attracted 25,000 people to the Sands Expo and Convention Center. And, this year's show floor is also smaller, going from 55,000 square feet last year to 35,000.

A smaller show doesn't mean the industry isn't doing well, though it indicates that it's harder now to make a buck by doing what comes naturally. Or un-naturally, if you like it that way.

Joanna Angel, for example, owns and operates eight adult websites, including Burningangel.com. She caters to viewers who want to see tattooed, "alternative" women, a niche she said she's been able to fill nicely.

Since launching her first site in 2002, Angel has not only added to her website collection but has branched out, selling merchandise and making paid appearances.

"We're trying to make our brand as strong as possible," Angel said. "Porn is not easy right now.

"(The industry has) gotten a lot smaller,'' she said. "There's not as much excessive money in the industry."

Five years ago, the adult film business was saturated, she said, but the recession made many of the small, less creative operations fall by the wayside.

"Consumers have gotten a lot more savvy," Angel said.

For her part, Angel said she tries to offer consumers a value -- an all-access pass for $20, for example.

"The key now is you have to do everything,'' she said. "There's no one thing that will make you money."

Steven Hirsch, founder and co-chairman of Vivid Entertainment, seems to agree.

In recent years, Vivid has branched out from its DVD business to use a variety of distribution channels, including mobile websites.

"We go after every possible revenue stream available," Hirsch said. "The days of just producing a traditional adult movie are over."

Five years ago, about 70 percent of Vivid's revenue came from DVD sales. Now, DVDs make up about 20 percent of the company's revenue.

"It's been difficult to make up the difference," Hirsch said. "When it's all said and done, those who are still strong will be left standing."

To differentiate Vivid from the competition, Hirsch said he's committed to buying and distributing celebrity sex tapes. Depending on the celebrity, that means paying $50,000 to $1 million for licensing rights where the cost to produce a regular adult movie starts at $15,000.

His ultimate celebrity sex tape coup would be Prince William and his new bride or Brad Pitt and Angelina Jolie. Unfortunately, even in a business that markets fantasy, those dreams probably won't come true.

"Something tells me they won't be walking to my door any time soon," Hirsch said.

Even Web-based companies have had to diversify in recent years. Manwin, a growing company that operates multiple sites, this week purchased Digital Playground in an effort to branch out into DVD sales. Previously, Manwin only dabbled in scene compilation DVD sales and hasn't produced the kind of full-length features Digital Playground does.

Kate Miller, director of communications and marketing for Manwin, said her company grows more than 10 percent each year without acquisitions. Manwin adult website memberships cost an average of about $30 per month.

"There are still a lot of people willing to pay for it," Miller said.

Allison Vivas, president and CEO of Pink Visual, a subscription-based premium Internet site, said that sales started to fall in 2007, but then stabilized in 2009, with "slight growth" since then.

"We're competing with a perfect storm," Vivas said.

If there's a silver lining, she said, it's that popular mobile devices such as smartphones and tablets have made porn more accessible to consumers. "Thousands" of new customers visited Pink Visual's pay site within hours of the start of iPad sales in January of 2010, she said. Every holiday season, the site sees a bump in business as more mobiles are given as gifts that keep giving.

But new technology may not be able to overcome tight credit and the loss of revenue from content piracy, the abundance of free legal content on the Web and diversion of consumers to social networking sites.

"It's an interesting point in time for the adult industry," Vivas said, adding that she sees the industry becoming more mainstream and moving in the direction of free sites supported by advertising.

"We have the perfect demographics for men's products and our research says that our customers are looking for more mainstream advertisers," Vivas said.

Another trend is a new revenue model for live, interactive sites that traditionally charge views for each minute they watch. Some are moving toward a tipping model. It works like this: No charge for entry, but the performance doesn't start until the audience produces a desired amount in tips.

"We have never been heavy into the live stuff, but seeing as it's a trend, we plan to get more involved in that," Vivas said.

Yay for diversification.

Contact reporter Laura Carroll at lcarroll@reviewjournal.com or 702-380-4588.