Move to Mobile Still a Tough Sell

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Adult-based content has been at the forefront of just about every video-based technological advance since color images permeated television screens in the 1960s. Yet today, if you sign onto Apple Computer Inc.’s iTunes Music Store or look on Verizon Wireless’s V Cast service, chances are you won’t find any content from Playboy TV or Hustler.

That’s because the adult industry has found itself in the unique position of watching general entertainment brands set the pace for new technologies like wireless video and downloadable video to portable players.

NO IPOD PRESENCE

As Walt Disney Co., NBC Universal and Viacom Inc. expose their most popular shows to consumers through iPods and most video-enabled cell phones, well-known adult programmers such as Playboy, TEN, Spice, Hustler and Playgirl are nowhere to be found. A lack of age-verification technology for distribution platforms like wireless mobile — along with a still questionable desire among U.S. viewers to watch adult content on small screens — have hampered the genre’s penetration of such emerging new media technologies.

Yet adult network executives believe that once enabled, the adult category will experience the same if not greater financial and usage success as its more mainstream counterparts.

If past is prologue, they may be right. Adult programming, with its inexpensive production costs and its particular appeal to a young male audience that is often on the cutting edge of new technology, has more often than not been the catalyst for — and the financial beneficiaries of — the birth of new video offerings. Rentals of adult content from mom-and-pop-owned home video stores in the 1970s helped usher in the videocassette business long before Blockbuster and Hollywood studios turned it into a multibillion dollar business.

Video pictorials of Playboy’s famed Playmates helped operators introduce pay-per-view to cable subscribers in the 1980s and New Frontier Media’s The Erotic Network was at the forefront of the surge in popularity of the video-on-demand platform in the late 1990s.

Anyone who has done any minimal cruising on the Internet knows how prevalent adult content is on the Web.

Unlike older technologies like VCRs and on demand where the genre thrived while Hollywood studios and TV networks were tentative to offer adult fare, the mainstream programmers didn’t wait long to experiment with video to portable devices.

“The early years aren’t exclusively dominated by adult anymore,” said New Frontier Media president Ken Boenish.

WIRELESS POPULAR OVERSEAS

That’s not to say that the adult genre can’t make up ground, particularly in the wireless arena. An April survey conducted by mobile-search research company JumpTap concluded that adult-related content represented 12% of all mobile Web searches, behind only searches for entertainers like rap star Eminem, the report said.

The Yankee Group estimates that wireless-based adult content could generate as much as $1.5 billion by 2009. So why isn’t provocative, X-rated video from TEN available to Verizon or Cingular subscribers?

Unlike video stores, VOD and the Internet, wireless service providers don’t have age-verification technology in place that would prevent underage cell phone users from downloading explicit images and video. So none of the major wireless companies are making adult content available to the masses.

“What’s holding things back in the U.S with regards to wireless is the perfection of age verification through the various third-party providers,” said Boenish. “I think protecting minors is always a big priority for us and the platform providers.”

Michael Klein, president of Hustler TV’s parent company, LFP Broadcasting LLC said Hustler is working with several mobile carriers on such technologies, but a solution isn’t imminent.

But in Europe and Asia where such technology exists, the adult mobile business is thriving, according to network executives. Klein said Hustler’s international wireless service, which offers explicit short video clips and full-length movies is “very profitable,” although he would not reveal specific figures.

New Frontier’s Boenish also said his company’s overseas wireless business is booming, but refused to divulge specific revenue earnings.

Not willing to wait for wireless companies, adult services like Hustler are exploring off-portal platforms that allow mobile users to access a customized Web site to download content formatted for cell phones.

Jim English, president of Penthouse TV, said his company has created non-nude, sexy clips “a la the Sports Illustrated swimsuit videos” that it’s pitching to cell phone providers as an alternative to more explicit fare.

“For those of us who have been focused on adult, it’s pretty tame, but for newcomers to the category, they’re willing to pay attention to this because it’s the only thing they can currently get from the phone providers,” English said.

Playboy and Hustler content is also noticeably absent from iTunes, where episodes of TV series like Lost, Desperate Housewives and 24 have generated millions of fee-based downloads. Like the wireless providers, the lack of age-verification technology has hampered the ascension of adult fare to iTunes. Apple could not be reached for comment.

But Boenish said that unlike the difficulties faced with formatting content for cell phones without the aid of major platform providers, New Frontier can and does offer iPod-formatted content on its Web site. Subscribers to TEN.com have access to hundreds of video clips, movies and other content that can be viewed on iPods.

Hustler also provides Web site subscribers access to iPod-downloadable video clips and full-length adult movies. Yet Klein said he doesn’t see it as major revenue category.

“We’re not seeing it as a strong market right now. People are not going crazy to download adult product to iPods,” he said. “That may change when there’s more product and more familiarity if and when there are less restrictions.”

SMALL SCREEN LACKS APPEAL

Bruce Leitchman, president of New Media research company Leitchman Research Group Inc. has a different theory. “I don’t know if people really want to watch adult programming on a two-inch screen,” said Leitchman.

Don’t tell that to the millions of people downloading erotic content in Japan and England, said English. “People stand back in too much of a judgmental mode and say, 'why would they download adult programming to the phone?’” he said. “But if they went to Korea, Japan and other places in Asia where the population are so stacked on top of each other, you’d see that people can’t watch an adult program in the living room because grandma lives there. But you can go off in the corner with your cell phone and your iPod.”

Given the opportunity, adult programmers are betting that many American wireless users would also find a quiet corner in the privacy of their own homes to download a Jenna Jamison flick from Playboy to their cell phones.

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