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Back to Basics

Back to Basics

October 17, 2008
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" These days, a company needs a plan to diversify its income sources and can’t hope on just staying afloat with income derived from DVD sales and the Internet. "

There are more outlets than ever for adult content and maybe none is more sought after — and more evasive — than the broadcast market. Cable, satellite, hotel, video-on-demand, pay-per-view, fiber optic delivery, IPTV, mobile and handheld device platforms — all of these distribution platforms represented coveted and potentially lucrative mediums for adult content producers. But getting a foot in the door, not to mention going through the licensing process and getting the content on the air, can be a daunting proposition.

But something has to be done. These days, a company needs a plan to diversify its income sources and can’t hope on just staying afloat with income derived from DVD sales and the Internet. If a DVD sells 1,000 units and brings in $15 per, (a generous accounting), that’s probably covering half the production costs. Content licensing is one of the most effective ways to turn that loss into a profit.

Lesson 1: What content to shoot
“Max Hardcore has problems,” Cable Entertainment Distribution (CED) owner Mark Bruder said. “His content has problems and we can’t have Max Hardcore problems domestically. We try to stay away from anything that is so obviously politically incorrect that it would cause way too many problems. Just straight, regular triple-X programming that’s been on for decades with companies like Time Warner, Comcast and DirecTV.”

Max is not alone. There are several broadcast systems operating in the U.S. and almost as many standards. Some still show only softcore, while others get increasingly graphic — but the extreme stuff simply doesn’t fly.

‘If a producer wants to license his title for broadcast, I suggest leaving out any slapping and oral scenes where the man is controlling the woman’s head,” said Amy Lew, VP of licensing and acquisitions at Pulse Distribution. “Don’t even have his hand on her head if you want to be extra safe. If it’s questionable, they’ll pass on the title.”

That rules out a lot of Porn Valley product, which only helps increase the odds for studios who are playing it safer. To reach the widest audience possible a producer will want to have a product that can fit into as many systems as possible. There is a happy medium. And the producer that is shooting both soft and hard is creating additional opportunities for his or herself.

Graham Travis, general manager at Elegant Angel, said that the company signed on with Hustler TV in 2006 and while it hasn’t had a huge effect on the way the company shoots, they are aware of what will fly with Hustler.

“It’s a completely different marketplace, so it’s vital that it’s exploited,” Travis said. “Because of the edits they have to do for the domestic market they can’t show anal, so we try to be cognizant of that, getting a decent portion of vaginal sex.”

Niche product is always popular and today the list is long: teen, MILF, amateur and big boobs are just some of the more popular trends.

“Niche content works pretty well everywhere,” Lew said. “For example, hairy, MILF and bisexual are always quick to be licensed for hotel broadcast.

Different brokers have different reactions to the feature vs. all-sex question. Bruder said, “More sex, less story.” On the other hand, Lew said, “More features. I could always use more features with soft versions.” The exception, everyone agreed, is Digital Playground’s “Pirates,” which transcends the marketplace and can pretty much write its own ticket.

David Kravis, the licensing veteran who established Coastline Licensing International in 1981 (originally as Coastline Films), says the presentations have changed in recent years.

“With the U.S. broadcasters you see a real transition, even with Playboy, as to the type of content they’re presenting,” Kravis said. “They used to be really interested in feature style, very high quality gentlemen’s entertainment. They’ve now revamped their channels to really portray more sex, less talk.”

Lesson 2: Where to sell and how
Just what are the odds of your titles getting picked up by a broadcaster? According to Kravis, pretty slim.

“A broadcaster in a lot of territories might use 10 to 20 new titles a month,” he said, “so you’re looking at between 120 and 240 titles a year. They had, what, 15,000 releases last year? And another 8,000 in Europe. So your odds out of 23,000 titles, this broadcaster needs 200 of them. So why do producers need me? Because I put in as big a percentage of those 200 titles as I can with that broadcaster.”

Brokers have the advantage of knowing the market, its players and its demands. While it can be done, trying to break into the broadcast game as an individual producer or studio can be tough. Between contacts and contracts, the majority of companies choose to go with a broker, at least initially.

“We’ve licensed titles from tons of different studios and usually know what titles the channels will pass on and how much they’ll pay for the ones they want to license,” Lew said. “We also coordinate the materials and then of course, make sure the system pays.”

Deals with a broker can be exclusive or non-exclusive. Most keep a small roster so that their clients aren’t poaching each other’s revenue. Dani Duran, who founded Ajax after more than 20 years with VCX and Cal Vista, said she only handles two clients, Lexington Steele (Mercenary Pictures) and TT Boy (Evasive Angles and Bubble Butt Inc.), exclusively. Everyone else is on a nonexclusive basis.

‘Alot of people won’t do things my way,” Duran said. “They want exclusivity or nothing at all, but I can’t stand to see today’s market and what the producer is putting out to make a good film and then not get money back on it. I’ll tell them that it’s just not fitting right now and to go ahead to see if someone else can handle it. You can do a good job for a few good companies, or you can do a lousy job for everybody.”

Also important is not undercutting your broker. If you’ve signed up with someone to handle your product, let them handle it. Nearly every broker had tales of woe about producers contacting outlets directly, undercutting long term possibilities for a quick buck.

“I don’t want to have to worry about them going behind my back and trying to sneak in a quick sale to someone who contacts him direct,” Duran said. “I get so tired of hearing, ‘Well, I called the producer and he said he’d sell it to me for…’ Suddenly I’m competing with myself! The producer undercuts me and I’m selling his product.”

Lesson 3: What do they want from me?
First of all, your paperwork must be in order. Every producer should know what the 2257 requirements are, and they can be certain that brokers, distributors and broadcasters are up to date. If you don’t have every piece of documentation, don’t waste your money on the postage to submit your content. Releases are required for everyone appearing in a movie. Music cue and dialog sheets are a must. Errors and omissions insurance (which brokers may provide) is necessary. One studio head said he’d even been asked to provide location releases. And, of course, there’s artwork and a good master.

Lesson 4: What’s in it for me?
Licensing isn’t as profitable as it once was, but there are more outlets available than ever. According to one broker, Playboy TV used to pay $27,500 for a movie, but today that number is significantly less. Still, the number of outlets continues to increase. Hustler TV, New Frontier Media (distributor to cable/satellite), Lodgenet (inroom hotel programming) are just a few of the targets a studio wants to hit when it sets out to license.

Even with all the possibilities, it’s clear that supplying content is only a piece of the pie. DVD sales alone are unlikely to make a profit for a title and the Internet isn’t doing much for most companies unless they have either a massive amount of content or extremely unique content.

Tony Cleary, worldwide sales manager at Vouyer Media, said that today broadcast revenue is equally important as DVD sales.

“When you talk about the money that broadcast can bring you per title along with DVD, now you’re starting to make some money,” he said. “If you don’t have the broadcast deals then you gotta be selling a whole helluva lot of pieces to pay for that movie — assuming you’re spending any kind of money to begin with.”

Lesson 5: What to watch out for
“I’d stay away from deals that license titles in perpetuity or allow your content to be re-released in compilations,” Lew said. “Unless a studio is offered a substantial amount of money, I wouldn’t recommend licensing any digital rights exclusively (mobile, IP, Internet).”

Producers also want to stay away from contracts that include as-yet-undiscovered methods.

“A lot of times when you’re making these deals they’ll try to include a bunch of rights and they may not even be set up to manage these rights,” Cleary said. “They figure it’s the future at some level and they just want to include it in there. We usually try to not include this kind of thing. ‘Any other digital format that could happen in the future,’ they try that one, too. Those are things you might want to shy away from.”


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