You Won't Really Go Blind
Digital MediaBy Marie D'Amico
Erotic new media a blindspot
The seminal technologies in my life used to be Retin-A , contact lenses, and microwave ovens. But in the past 10 years, my watersheds have been personal computers and the Internet, which have benefited me 64K-fold. I can purchase a CD-ROM-ROM with an encyclopedia and save lifting 50 pounds or traveling to the library when I want some information. I can browse the Internet and locate scholarly research regarding any medical topic. The 56K line to my house permits me access to almost anything, anyone, at any time with no click-and-wait.
But, the digital world isn’t all about information, education, and Mystian -entertainment. It’s also about that subject for which Pope John Paul II says is procreation, Dr. Joycelyn Elders was fired, and Sodom & Gomorrah were burned. Yes, sex. When it comes to S-E-X in new media, most of us tend to don blinders. None of us are masters of our domain; to ignore the adult market segment, which is very real, large, and profitable, is to have a bleary-eyed and myopic view of the entire digital universe. At best, we are getting an incomplete picture of the market, at worst we could be blindsided by our own prudishness. How can we asses the impact (for better or worse) of a market segment about which there is a conspiracy of silence?
No industry analyst even conducts significant quantitative market research or analysis targeted specifically to the digital adult market. For example, The Software Publishers Association ( SPA ) tracks sales of CD-ROMs in the categories of home education, content, games, and languages & tools. See any category that Virtual Valerie fits?
Granted, most digital "adult" titles are just overworked teenage fantasies about buxom babes for men and many of us find it somewhat incredible that there are men desperate enough to shell out $40 for them, but the market exists. At the risk of being turned into a pillar of salt, we decided to take a look.
To view the size of the current, or potential, market for digital adult entertainment, we must don glasses at the correct diopter. Otherwise, as Penthouse Magazine-parent General Media’s own public relations firm, Markham Novell, says, "it’s impossible to determine the size of this market." To assist our digital vision, let’s start with a look at the analog adult market.
Fit To Print
The analog adult market consists of two segments, print and video. It is estimated currently there are 200 "adult" magazines in the U.S. generating yearly revenues of $500 million to $1 billion, with at least one in every ten American males reading Playboy , Penthouse , or Hustler each month. The range is so wide because, as in the digital world, no one researches statistics in the analog adult world. For example, Playboy’s public relations department stated that they do not track the adult market because they are "a category unto themselves." Leading National Advertisers (LNA) tracks ad pages in 700 print publications; the only "adult" magazines LNA reports upon are Playboy (circulation: 3.4 million/year) and Penthouse (circulation: 1.93 million per year), which rank 102nd and 103rd out of the 189 top magazines in the "consumer" category. LNA does not track adult print as a separate category. Adult magazines in Europe are more prolific and profitable than in the U.S. For example, adult mags in Sweden (pop: 8.7 million) gross annually $55 million ($6.3/person) and in the United Kingdom (pop: 58 million), adult mags gross annually $800 million ($13.8 per person).
The U.S. adult print market, unlike its European counterpart, was dealt a revenue-stinging setback in 1986.
That year, then Attorney General Edwin Meese formed a commission to study efforts to control pornography’s dissemination. The commission’s report concluded a causal connection existed between pornography and sexual violence. Meese then sent a letter, on Department of Justice stationery, to owners of large drug and convenience stores stating they could be publicly sanctioned for sales of print pornography. Although publications such as Playboy and Penthouse have never legally been found to be "pornographic", many companies, including Southland Corporation (7-Elevens), RiteAid Drug Stores , Revco , Thrifty Drug , and Dart Drug, banned sales of adult magazines. In 1986, 95 percent of all adult print sales were over-the-counter; today, only 69 percent are. The adult print market never recovered from the loss in revenue and easy access to consumers caused by the widespread store prohibition. Although more than 25 scientific studies repudiated the Meese Commission’s claims of a causal association between pornography and sexual violence, the de facto ban on sales remains in force.
Let’s All Go to the Movies
Adult tapes are often credited for the ballistic growth of the VCR market. The two best things to happen to the adult video market were the videocassette recorder (VCR) and the store-wide ban on adult magazines. Before 1986, sex had a home in video; e.g., in 1979, less than one percent of all Americans owned a VCR but 75 percent of all videocassette titles were adult. With the widespread store ban on print sex in 1986, video sex now found tape and film a gold-plated castle. In 1987, there were 1300 adult titles on the market; in 1993 there were 2475 — 90 percent growth.
In Japan, the growth in adult video has been astronomic; while the population (124 million) is half that of the U.S. (258 million), they have 5.6 times the number of video titles (14,000).
In 1993, combined total sales and rental volume of adult tapes in the U.S. was $2.1 billion (sales: $521 million, rental: $1.6 billion, on 490 million rentals); the total in 1991 had been only $1.2 billion, so America’s seen an increase of almost 100 percent in the size of the X-rated market in just two years. The adult share of total video sales and rentals has, however, remained almost consistently 11 percent to 11.75 percent because increasing distribution has been hampered by many large-scale chains’, such as Blockbuster Video , prohibition on the rental or sale of adult titles. In European countries where there are no video store prohibitions, adult titles represent a greater percentage of the video rental and sales market. In Sweden, 25 percent of all video rentals are adult titles and in Italy 50 percent of all video sales are adult titles.
Yes, Virginia, It Is A CD-ROM Christmas
The best thing to happen to the adult digital market is the growing use of CD-ROMs which provide realistic full-motion video. Added realism makes the "content" more appealing. But how good has the market been to adult titles?
Adult producers need Herculean CD-ROM growth because increasing market share will be a Sisyphean task. Distribution, advertising, press placement, and trade shows for this genre are all limited. Major distributors, e.g., Merisel and Ingram , refuse to carry adult titles; ditto most mail order catalogs like MacWarehouse , MacZone , PCZone , PCConnection , and MacConnection , which account for about 55 to 60 percent of all Macintosh software sales and 10 percent of all PC software sales. Smaller distributors, such as BodyCello, Mission Control, and StarWare Publishing, carry almost exclusively adult titles via mail order and, report substantial and rising revenues. Some mid-size store chains, such as Fry’s Electronics , Circuit City , Tower Records , and Virgin Records , are beginning to stock a few adult titles. Ziff Communications Company and IDG Publications , owners of most digital print pubs, allow advertisements for adult products in the display classified advertising section of their ’zines, but not within other parts of the books. In addition, adult companies print few press releases, feature stories, or product reviews of adult titles.
Most trade shows in the U.S. and Canada have recently imposed restrictions on the demonstration of adult products; however, in Europe and Japan, no restrictions are imposed. The Interface Group, which runs Comdex and Windows World , issued a press release on June 9, 1994 stating no "nudity and sexually explicit material" may be shown; PG is okay, R is not. At the Consumer Electronics Show ( CES ), adult titles may only be demonstrated in a roped-off, guarded area; identification to prove the attendee is 21 is required. At Mitch Hall Associates, proprietors of MacWorld , CD-ROM Expo , PowerPC Expo , and SunWorld , policy follows the CES lead, with roped-guarded area; however, as of January 1, 1995, the new policy will permit "mild stuff" on the regular show floor, while prohibiting most adult distributors from attendance.
These restrictions either increase the cost to adult title exhibitors and decrease the foot traffic in their booths or preclude their attendance and access to distributors, dealers, and consumers. All trade show organizers have publicly stated their policies are a result of "complaints received from exhibitors and attendees;" but adult producers allege they’ve received few complaints from either group.
Nevertheless, the growth of the CD-ROM market in 1994 bodes a rosy future for adult titles. The SPA reports CD-ROM software sales in the first quarter of 1994 were $136 million, up a whopping 366 percent from the year before. Unit sales in the first quarter 1994 were 4.44 million, a 256 percent increase from same period in 1993. However, 50 percent of all sales for 1993 occurred in in the last quarter; total sales for 1994 could be stellar. And non-bundled sales, which means consumers are buying CD-ROMs after they purchase their CD-ROM drive (adult titles are not bundled with computers being carried out the door at CompUSA ), accounted for 52 percent of unit sales and 83 percent of revenues. Many analysts estimate — but with no rigorous qualitative analysis — that adult CD-ROM titles in the U.S. account for 10 percent of total CD-ROM sales, or 444,000 units for the first quarter of 1994, with $13.6 million in sales; and worldwide, 18 percent of total CD-ROM sales, 799,000 units for the first quarter of 1994 at $24.48 million in sales. However, if the performance of adult titles compare to those in either the "home education" or "games" categories, we’d see a distribution of approximately 23 percent of total unit sales, up 367 percent from the first quarter of 1993, or 29 percent of unit sales, up 281 percent, respectively.
No disputing the bottom line
The adult CD-ROM market, composed principally in the U.S. of six major companies, is booming. Content ranges from soft-core photos to hard-core snuff. Many producers started out simply adapting adult CD-ROM content from video and print, keeping their production costs and development times near nil. The results were either electronic forms of girlie magazines or QuickTime-recycled X-rated videos. Most companies are now shooting original CD-ROM scenes simultaneous with video, so costs and development times remain small; revenues are sky-high.
For example, Digital Playground, Inc. , a one-and-a-half-year old adult CD-ROM company located in Chatsworth, California, has a sister arm company, New Sensations, who has produced adult videos for 10 years. The two companies cross-pollinate their video and digital content to achieve CD-ROM production costs in the $20K to $100K range. Development times run just two to six months, and street prices in the $29 to $69 range. This compressed time schedule has allowed them to produce a dozen titles for both Windows and Macintosh in 1994. Digital Playground would not disclose unit sales or revenues. Electronic Games magazine said the company’s new title, Vampire’s Kiss , "rival(s) Broderbund ’s Myst and Virgin’s 7th Guest ."
Similarly, Vivid Videos , a producer of adult videos for the past ten years and the second largest company in the category, has used their enormous stock of content to produce 40 adult digital titles for CD-ROM, CD-ROM-I, and 3DO. They intend to produce 30 to 35 new titles in 1995. A video title takes a mere week to produce, a CD-ROM title a bit longer. They employ their pre-existing worldwide video distribution network to sell adult CD-ROMs and have reported annual sales of 10,000 units per title.
General Media, through its Penthouse unit, has quickly produced four CD-ROMs in their " Virtual Photo Shoot " series which allow the viewer to pose and photograph Penthouse Pets. The content can be paraphrased by Butthead’s line, "It would be cool if girls just did what you wanted ’em to." Annual sales are between 30,000 and 40,000 units per title at retail prices of $99. The company claims a highly-doubtful audience that allegedly includes 15 percent females. Mission Control, an adult producer and distributor that has more than 25 CD-ROM Windows and Macintosh titles on the market, is producing two and three new titles per month at a street price of $29 to $69. The company said it sells 60,000 units annually.
In 1994, sales of CD-ROMs containing simply X-rated photos plummeted considerably; consumers now demand and receive interactivity. New Machine Publishing has grown from three to 45 employees solely on the strength of 35 adult CD-ROM titles. Lawrence Miller, the co-founder, aged 26, said the company had at first wanted to make an educational title, but the money just wasn’t there. Instead, revenues from titles such as The Interactive Adventure of Seymore Butts, which helps a man get a date, and The Dream Machine, which contains escorts who morph into "pleasing images" based upon user input, will permit New Machine to produce about 12 new titles in 1995; many will be sequels of previous programs, but almost all will be interactive.
New Machine is using its burgeoning revenues to finance new companies. Interotica, a spin-off, will produce "softer, erotic, but not X-rated" adult titles, according to Miller.
Pixis Interactive , an adult CD-ROM producer, did not mature from the print or video adult market, like many of its consorts. The founders, Mark Media and Paul Wu, produce adult CD-ROMs containing a combination of original adult content, their soon-to-be-patented "Touch Feel User Interface", and virtual reality. They have released six titles in the past two years and plan on six more for 1995. A high-end title takes six months to a year to produce. Space Sirens , a sequel to their popular Virtual Vixens , has already pre-sold 30,000 units in the U.S. Not bad for a product that isn’t sold through standard distribution channels.
Sex in Cyberspace
Prodigy , America Online , CompuServe , Ziff , Apple Computer , and Microsoft Corporation are all hoping online services will be the revenue-producing fount oil has been for the Kuwaitis. According to Simba Information Inc. , a market research firm, their hopes may be justified. In their report, Online Services: 1994 Review, Trends & Forecast, they estimate more than 7.7 million subscribers were online by the end of 1993, up 19.9 percent from 1992. Revenues in 1993 for such services were $11.3 billion with consumer services representing five percent of the total, or $565 million. They predict 20 percent annual growth for such services and eight percent annual growth for the consumer sector. How much of online services are used for "adult entertainment" or "sex chats"? Unquantifiably, plenty.
In August 1994, a monthly compilation of the busiest Usenet newsgroups found three out of the top 10 are sex related, they and have topped 400,000 in readership. A recent survey listed among the most-requested word search topics in Veronica on the Worldwide Web (WWW) as: sex (1st), games (3rd), and Playboy (6th). Education and business were listed at 12th and 16th, respectively. A survey of 3,000 net users showed 56.5 percent used the net and bulletin board services (BBSs) to chat and 22.4 percent for sex talk (multiple responses were permitted). On the WWW, one can find myriad sites where "adult" topics are discussed — alt.sex, alt.sex.bestiality, alt.sex.bondage, rec.arts.erotica ("the sky’s pretty much the limit"), alt.binaries.pictures.erotica, alt.mag.playboy, and more. One digital "adult" picture archive at Delft University in Netherlands, recently closed, was downloading 30,000 files every day; with 10,000 daily visitors it was one of the world’s busiest Internet sites. The University’s top 50 chart of downloaded pictures hadn’t contained a non-pornographic picture for the past two years. (Buyers had to beware: Accesses were logged and each month they printed a list entitled "Top 50 of Horny Geeks.") In France, when Minitel was installed in millions of homes in the late 1980s, the network was overloaded and brought down the very first summer by a plethora of X-rated messages being sent amongst the participants.
Take Off Those Digital Blinders
The digital adult market, via computers and the Internet, is, and will continue to be, a substantial and remunerative segment of the digital world. In fact, it might be responsible for supporting and swaying this market in ways we don’t understand.
Look at how the sex industry subsidized the legitimate video market through a time it couldn’t have otherwise survived. Are adult titles and services prompting some CD-ROM drive purchases and online service memberships? The profile of who buys high-tech equipment is eerily similar to the consumer of other adult services — male, white, moneyed, and in his 20’s and 30’s. And what about the less-quantifiable impacts this genre is having on the entire market? Publishers out to capture an adult gaming audience admit that many of their customers buy children’s titles or reference titles and try to factor in that impact.
Acknowledging that the adult market exists and exploring its influences doesn’t have to mean that Carmen San Dieg o will suddenly start showing a little cleavage. On the contrary. The 13 year-old minds many publishers are trying to reach have probably found out where the Brandy’s Busty Vixens is being hid, just as they found the Playboy . Including adult titles in our examination of the market might mean that we can better understand why so few of those 13 year-olds (and older) are female.
Unless and until we accurately and qualitatively assess the entire digital market, including the sex segment, we’ll continue to view the digital world, and ourselves, in soft-focus. We may like what we see, but like RC-Cola, it’s not the real thing.
Questions? Send me email .
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