The report goes on to state that this revenue will be derived primarily from an increase in the adoption of streaming video and video chat. The latter platform hasn't been explored in too much detail in the U.S. to this point, because 3G (Third Generation) services weren't available on a large scale. But now 3G services are experiencing a very sharp rise in usage, which means that a significant portion of the projected new revenue will come from relatively underdeveloped marketplaces.
The key new marketplaces primarily will be the U.S. and Canada. Operators in both countries, as a whole, are still trying to find a means of delivering adult content to people in a format that works for them. What a lot of people are doing now is offering their adult content off-deck or off-portal, trying not to create any problems with customers. But this is proving to be a difficult challenge. Most adult content has been limited to bikini and lingerie offerings, provided by carriers' on-deck. The term "on-deck" means that this content is listed as adult with the carrier through a signed distribution agreement. This listing also allows the content to become searchable inside the carrier's network.
People can find your content and then purchase your content with a premium short message service (PSMS) model. This means customers who purchase your content with a direct charge to their phone will have the ability to watch that content on their handset without any money officially changing hands. Instead, they receive that charge on their phone company bill every month. The telephone company takes roughly 50 percent of that, across the board, and you're left with the other 50 percent.
The other method of distribution is much less restrictive and is called off-deck. With this model you basically develop a site specific to mobile devices, able to detect mobile browsers. Essentially, it's designing a version of your own site for mobile phones. With a little mobile SEO and a link from your PC site to your mobile site, anyone with Internet access on their handset can find your site. And like I said before, you don't have to deal with as many rules, restrictions and regulations as with on-deck. Billing can be handled via credit card gateways like the GoGoBill thumb wallet application, now being provided by CardBiller. This is a numeric only credit card billing application, and you don't have to worry about hardcore content not being allowed on a phone carrier network or giving up 50 percent to the carrier. It's just straight credit card revenue.
This is the approach I've taken since the inception of mobile adult content because there is no reason why carriers should be able to tell us what content we can distribute to consenting adults, and what content we cannot. There's also no reason to surrender 50 percent of your revenue to them.
If you decide to go off-deck, you are in good company. I believe that this is the most advantageous choice, and so do many of my colleagues. Going off-deck basically involves coding your new site in a mobile-friendly language, primarily in XHTML or hypertext markup language, with the "X" (in this case!) standing for "extended." Although XHTML is the most popular coding language, people also use JavaScript and some Flash applications, although that is not effective with the most of the phones on the market today.
A number of adult content producers also are offering direct-to-consumer websites that are specifically designed for the mobile phone. As consumers become more comfortable and familiar with the off-deck environment, traffic to these sites will start to grow exponentially. This allows the consumer to take the content with him anywhere he or she goes. Content producers can use this feature as a value-added up-sell for the client, thereby increasing the attractiveness of your online offer.
Content providers need to take note, however, that there has been a great deal of new legislation that will affect the mobile business in places like Israel and China. The growth of adult content in these countries is on the rise, and in Europe adult mobile content has grown faster than anyone anticipated. This has caused some of those governments to implement bans or options to block adult content on cell phones there.
Based on the Juniper report and my own research, mobile adult content will hit North America especially hard in this year, with the advent of the 3G network and robust multimedia handsets.
Access to the 3G network has been available for a long time in Europe, Asia and even in Latin America. Mobile content will be a major focus for a lot of people in North America this year, and this may result in complications. You only have to look at the recent events in Canada, where officials wound up condemning that country's No. 2 phone carrier, Telus. They forced Telus to stop offering mobile adult content, so there are still some obstacles that mobile content services probably will have to face in the U.S.
It is simply difficult to get around some people who are bent on stopping you from delivering your content if it is carrier controlled. This is why I recommend delivering content off-deck, because it gives the customers a direct route to the Internet from their cell phones with little restriction.
Overall, the technological feats of 3G and phones like the iPhone — able to support high-definition streaming video to handsets — are going to be the key to adult content, as well as to mainstream video, in the coming year. Already there are active markets for things like video chatting, where customers pay $30 to $60 per month to exchange video messages. You can expect a boom in streaming clips into video chat, which will make it really come to life. This feature will become a mainstay in the adult environment thanks also to the improved speeds in delivering quality content that up to now haven't been available.
Harvey Kaplan is Executive Vice President of Wireless Development for BustBox Media.
