The Future of Online Adult Entertainment: Surging demand, the rise of free porn and the emergence of new business models

Published by: Business Insights

Published: Dec. 1, 2009 - 120 Pages


Table of Contents

The Future of Online Adult Entertainment
Executive summary
Market context: the rise of online services
Shifting the balance of power
Company profiles
The future of online adult entertainment
Chapter 1 Introduction
Introduction
Who is this report for?
Definitions
Adult entertainment
Convergence
Digital pay-TV (DTV)
Internet Protocol TV (IPTV)
Internet TV
Mobile TV
Peer-to-peer (P2P) networking
Social networking
Tube sites
User-generated content (UGC)
Video on demand (VOD)
Chapter 2 Market context: the rise of online services
Summary
Introduction
Online adult entertainment market trends
A highly fragmented market
DVD and magazine sales fall in the face of rising online uptake
Echoing developments in the mainstream multimedia market
Adult movie production and DVD sales on the decline
The explosion of online services
Broadband market development drives online adult entertainment opportunities
Higher speeds bring new content-related opportunities
Consumers exploit broadband potential
Long- and short-form content each have their place
Online video usage is increasing rapidly
Consumers flock to online adult services
Online adult content user demographics
Regulation and censorship provides significant challenges
Regulation varies considerably by country
Restrictive measures show varying levels of success
China’s anti-pornography crack-down
Age verification comes under scrutiny
Piracy just as prevalent as in the mainstream entertainment sector
Chapter 3 Shifting the balance of power
Summary
Introduction
Shifting the balance of power
Tube sites make their presence felt
Low cost of entry results in a crowded market place
Revenue generation is a difficult task
Free online content impacts heavily on traditional players
Traditional players seek to catch up lost ground online
Tube sites offer some potential for content producers
Mobile opportunities increase
Adult mobile services develop apace
Rising 3G penetration boosts demand for mobile content
Device evolution boosts mobile content potential
Mobile TV opportunities limited in the short term
Alternative portable solutions are gaining more traction
Major hurdles remain
Continued demand for digital TV services evident
Chapter 4 Company profiles
Summary
Introduction
Private Media Group
Vivid Entertainment
Playboy Enterprises
New Frontier Media
Beate Uhse
Conclusions
Chapter 5 The future of online adult entertainment
Summary
Introduction
Future adult entertainment market trends
Generating revenue from tube sites will be a difficult task
A focus on interactivity and ‘unpiratable’ content
Consumers seek more interactivity
Live video chat services show their potential
Haptic content could become a reality
Online providers must ensure that content is regularly refreshed
Repurposing of content for multiple devices increasingly essential
Adult console games on the horizon?
High definition content and 3D-TV
Consolidation is on the cards
Online services to offset declining DVD sales
Asia-Pacific to become the largest online adult entertainment market
Index
List of Figures
Figure 2.1: Historic US adult video rental/sales revenues ($bn), 1992-2006
Figure 2.2: Private Media Group’s declining magazine circulation
Figure 2.3: Worldwide consumer Internet access subscribers, 2007-2012
Figure 2.4: Consumer Internet subscribers by region, 2008
Figure 2.5: Internet subscribers by region, 2012
Figure 2.6: Broadband boosts multimedia usage (2008)
Figure 2.7: Short-form content still rules in the online world (2008)
Figure 2.8: Interest in user-generated content declines with age
Figure 2.9: Proportion of online population streaming online video, December 2008
Figure 2.10: Online video reaches 80% of US consumers
Figure 2.11: Adult and advertising account for a growing % of US online video
Figure 2.12: Demographic comparison of adult sites users: age
Figure 2.13: Demographic comparison of adult sites users: gender
Figure 2.14: Browsing location comparison
Figure 2.15: Legal status of pornography by country
Figure 2.16: China consumer Internet subscribers (000s), 2007-2012
Figure 2.17: Chinese adult content censorship appears to be working
Figure 2.18: UK teenagers accessing adult content
Figure 3.19: Tube sites drive adult video content usage
Figure 3.20: Redtube.com premium subscription offering
Figure 3.21: 3G share of worldwide mobile phone subscriptions & revenues, 2005-2013
Figure 3.22: Worldwide mobile connections and revenues, 2007-2013
Figure 3.23: Smartphone shipments by region (000s), 2008-2014
Figure 3.24: Global VOD revenues ($m), 2007-2012
Figure 4.25: Private Media Group revenue by sector (€000), 2002-2008
Figure 4.26: Private Media Group revenue sector share (% revenue), 2002-2008
Figure 4.27: Vivid Entertainment estimated revenue sector share (% revenue), 2005 and 2008
Figure 4.28: Playboy Enterprises revenue by sector ($m), 2003-2008
Figure 4.29: Playboy Enterprises revenue sector share (% revenue), 2003-2008
Figure 4.30: New Frontier Media revenue by sector, 2003-2008
Figure 4.31: New Frontier Media revenue sector share (% revenue), 2003-2008
Figure 4.32: Beate Uhse revenue by sector (€000), 2003-2008
Figure 4.33: Beate Uhse revenue sector share (% revenue), 2003-2008
Figure 5.34: Worldwide adult entertainment revenues by sector ($m), 2008-2012
Figure 5.35: Worldwide adult entertainment revenue sector share (% revenue), 2008-2012
Figure 5.36: Online adult entertainment revenues by region ($m), 2008-2012
Figure 5.37: Online adult entertainment revenue regional share (% revenue), 2008-2012
List of Tables
Table 2.1: Historic US adult video rental/sales revenues ($bn), 1992-2006
Table 2.2: Worldwide consumer Internet access subscribers, 2007-2012
Table 2.3: Consumer Internet subscribers by region, 2008
Table 2.4: Forecast consumer Internet subscribers by region (000s), 2012
Table 2.5: Adult and advertising account for a growing % of US online video
Table 2.6: China consumer Internet subscribers (000s), 2007-2012
Table 3.7: 3G share of worldwide mobile phone subscriptions & revenues, 2004-13
Table 3.8: Worldwide mobile connections and revenues, 2007-2013
Table 3.9: Worldwide smart phone shipments by region (millions), 2008-2014
Table 3.10: Global VOD revenues ($m), 2007-2012
Table 4.11: Private Media Group revenue by sector (€000), 2002-2008
Table 4.12: Playboy Enterprises revenue by sector ($m), 2003-2008
Table 4.13: New Frontier Media revenue by sector ($m), 2003-2008
Table 4.14: Beate Uhse revenue by sector (€000), 2003-2008
Table 5.15: Worldwide adult entertainment revenues by sector ($m), 2008-2012
Table 5.16: Worldwide adult entertainment revenue sector share (% revenue), 2008-2012
Table 5.17: Online adult entertainment revenues by region ($m), 2008-2012

Abstract

The adult entertainment industry has long been considered as an early adopter of new technology, and has been responsible for helping to drive of new delivery platforms including VHS, DVD and more recently broadband Internet access. But the rapid increase in consumer broadband penetration has been a double-edged sword for the sector; while new providers have emerged which leverage Web 2.0 to provide popular online services, many established players for whom physical media sales have traditionally accounted for a significant proportion of revenues are struggling to compete against the plethora of free sites.

With DVD and magazine sales falling fast as consumer consumption patterns change, companies must react quickly to retain a pivotal market position. The additional opportunities afforded by mobile, interactive TV and gaming platforms provide new opportunities, but adds to the evident fragmentation of both content services and business models.

Key features of this report
  • Overview of the industry trends, technological evolution and changing business models that have driven development of the online adult entertainment market.
  • Revenue forecasts to 2012 for adult entertainment revenues: includes breakdowns for online, mobile and broadcast services, plus DVD and magazine sales.
  • Market projections for related communications and entertainment products and services including consumer broadband, mobile telephony and smart phone shipments.
Scope of this report
  • Gain a comprehensive understanding of how market trends are boosting the potential of online adult entertainment services, and the impact such developments will have on traditional business models and strategies.
  • Understand how the competitive environment is changing, and specifically how the emergence of adult tube sites has disrupted the traditional status quo.
  • Quantify the adult entertainment market opportunity, gaining an insight into the revenue potential of online, mobile and broadcast adult services, while gauging how demand for physical media will fall.
Key Market Issues
  • Although adult content remains prohibited or strictly controlled in many country markets, in general there has been a relaxation of legal restrictions over recent years. However, some markets - notably China - are strengthening their anti-pornography stances, providing a major challenge for many across the industry.
  • Just like the music industry before it, the adult entertainment sector is seeing rapid declines in its core business (i.e. DVD and magazine sales), with digital distribution essentially needing to fill this void to maintain revenue growth. Consumer consumption of adult content has shifted from physical media to the web, while online usage is changing rapidly as technological advancements allow the deployment of more advanced and interactive multimedia services.
Key findings from this report
  • Fragmentation is rife. Within the online adult entertainment industry, there are a small number of large firms and a huge number of smaller firms; the rise of tube sites means that this proliferation is more marked than ever before.
  • The wide range of content available for free will continue to have a negative impact on premium providers’ ability to attract and retain fee-paying clients.
  • Relative to tube sites, the online destinations of leading established market players attract far lower traffic volumes and usage.
Key questions answered
  • What are the major trends shaping the online adult entertainment market?
  • Why are traditional adult entertainment firms investing so heavily in the deployment of online services?
  • Which factors are likely to restrict the potential of online and mobile adult entertainment services and why?
  • To what extent will adult tube sites threaten the traditional status quo across the adult entertainment industry?
  • How will the market for adult entertainment services evolve, and which future trends will impact on developments over the course of the next 2-3 years?


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