ADT Thread: Porn Fuddy Duddies Going Belly-Up? Is Quality the real Issue?

Check out the following thread on ADT about the economy hitting the big porn players:

http://forum.adultdvdtalk.com/forum/topic.dlt/topic_id=131369/forum_id=1/cat_id=1/131369.htm

> Fingerbangger writes on ADT: I just got off the phone with a friend of mine who worked on all the vivid sets and he was told that they were cutting production in half. They told him that they were not even using a lighting crew anymore. I'm sure there is a chance they were telling him this because they hired someone for less, but the way he tells it they seem to be really hurting. If Vivid is losing money and cutting back, what is going to happen to the rest of the business?

> tux 2 says: Given the look of many Vivid movies I've seen, I was a little surprised to hear that they've had lighting crews on some of those shoots.

> bbounce adds: I am not convinced that Vivid is the industry barometer as much as it used to be. I would venture a guess that some other players are a little more cash positive enough to weather a storm.

> Ronin3 adds: NPR did a decent story on this when Larry Flynt apparently joked about the need for a $5billion
porn bailout.

What they found is that the companies willing to change their habits were doing well and the old timers stuck in the mud were having big problems.
The "NPR article" is longer, but here is the jist of the story.

DOWNSIDE:
"The economic downturn has affected everybody," says Steven Hirsch, the CEO of Vivid Video. "People simply don't have as much money as they used to. The guy who used to spend $100 on adult content is now only spending $50."..............Hirsch is a second-generation adult entertainment producer. He started working for his father when he was 19. In its 25 years, Vivid has become an industry giant, bringing adult stars such as Jenna Jameson to the screen, and distributing sex tapes of celebrities such as Pam Anderson and Kim Kardashian. ....But even those names don't sell like they used to."

UPSIDE:
Several miles away from Hirsch's sleek offices, Jax Smith, the CEO of SugarDVD, is on his third Internet venture. SugarDVD was his first. In seven years, the business has grown into the adult-entertainment version of Netflix. He's made money every year. For Smith, the passion comes not in the product itself, but in marketing it.

"We might as well be selling peanut butter here," he jokes, "as long as there was something there was a niche for, and we could do well at it."

Maybe, but peanut butter jars don't have these kinds of titles on their labels: Who's Your Daddy 7, Slutwoman, Chicka Boom 32 X.

Smith initially hoped he would find veteran partners for joint ventures, but says the old guys are slow to adopt the new technology and turned him down. Trust is hard to come by in the porn industry.

Smith has moved ahead, regardless, using technology to enhance distribution, and has diversified his offerings to include sex toys and high-quality video-on-demand to make up for DVD losses. He predicts that the recession that is squeezing his colleagues will boost his own business. That's one of the few times this year you'll hear anyone express gratitude for an economic downturn.

And what about those "old guys" who turned down the chance for collaboration? Four of their businesses went belly-up, and Smith is planning to buy them later this year.

> mrbluelouboyle writea: I believe Digital Playground is the new Vivid. Vivid dosen't have that type of power anymore, in my opinion.

> hollywood woody writes:I can see how you may say that, but let's look at the big picture. Vivid has been in business for 25 years, their catalog of content is king. If Steven doens't ever shoot another movie, it wouldn't effect his bottomline one bit. Here is a company with assests DP wish they had a 10th of. It is hard for me to believe Vivid has cut back on areas like lighting, the sets need to be lit regardless of how much they cut back. That is just kind of silly.

You also have to understand everything is done in house, they don't farm work out generally speaking. Vivid is still the industry standard, they ebb and flow like everything else, but most people recognize that Steven Hirsch is the man, we all want to be him, but we can't. I worked for Vivid for close to 20 years, and I could write a book, but the bottomline is Vivid has developed into the best company in the business, he gets a ton of respect and he deserves it. Everyone takes aim at the man on the top, that's business, but there are very few people who could write a check for a million dollars or more in this business, Steven can and it won't bounce.

LadyB writes:... The studios that are getting hit the hardest are the low budget, crank 'em out gonzo studios.

It reached the point about five years ago where anyone with a handi-cam decided they could shoot porn, the market is flooded with exactly the type of "gonzo" stuff you are talking about. Most of them are gone now, they found out that they were lucky to get the production and packaging costs back, unless they were available in VOD only. But the distributors are still ready and willing to sell any retailer a 100 spool of those gonzo DVDs for $100 a spool. The joke is that you can buy by the pound for $10.

Larry Flynt hit the subject dead on within his speech at the AVN Awards, and the rumble is getting louder all over the industry - make better movies. If the majority of studios can cut out the crap and concentrate on quality, this industry can and will survive. It can compete against the multitude of websites with cheesy hand held video, where the same couch and the same no name talent is doing well today.

Consider that an average Vivid feature title can still sell around 5-10,000 units, and the average gonzo sells less than 500 units. The only way that anyone can make money on gonzo type flicks is to try for broadcast rights and VOD licensing. Since most broadcast outlets aren't going for gonzo type porn in the first place, that cuts out the most effective way to make back some money and actually turn a profit.

NPR and Hirsch have the best point on all of this - adapt or die. It doesn't matter if you are shooting mega-buck features or gonzo, you have to forget about DVD and any hardcopy format and aim straight to streaming media.

Whenever a startup asks for my opinion on how to get into the ndustry, my answer is always the same: Own and Control your own product. Forget DVD. Put your start up money into a good VOD/download website, and make sure that whatever you are selling is different than the rest and only available through you.