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The Evolving International Market

The Evolving International Market

October 27, 2011
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" Certain countries might represent outstanding opportunities someday but are currently very difficult, if not impossible, to monetize, due to local legal restrictions, and/or the lack of a reliable mechanism for billing customers in that country. — Quentin Boyer, "

Just how important are international sales to American porn manufacturers? “Overseas is critical,” said Peter Reynolds, whose Plaid Bag Media sells content around the world for clients that include, exclusively, Adam & Eve. “It’s a new world order and every studio has to look at every aspect of the market now and not rely on their domestic sales, as they did years ago.”

And it’s a whole lot more than just icing on the cake.

“Evil Angel relies on foreign sales for a substantial portion of its DVD or DVD rights revenue,” said Christian Mann, Evil Angel’s general manager. “To us it’s not an ancillary market — it’s an important, vital part of the whole.”

“Foreign sales is a significant component of our income,” echoes Elegant Angel GM Graham Travis.

Quentin Boyer, Pink Visuals’ director of public relations (and primary market/data analyst), couldn’t agree more. “The European market is now a much bigger part of our overall revenue composition than at any other point in the company’s history. Our foreign sales are a growth area for us.”

Girlfriends Films sells profitably to Europe and Australia, but owner Dan O’Connell cautions, “The European DVD market is going through a downsizing that’s even worse than ours because consumers there have a stronger focus on computer and mobile content.”

Yet that focus is paying off for companies like Pink Visual. According to Boyer, “our foreign mobile sales are far higher now than they were even one year ago. We’re doing thousands of transactions in the European mobile market, daily.”

Traditionally, there have been two primary business models for selling product abroad: pieces and rights. Either you pack up your product and ship it overseas, the same way as in the States (Evil Angel makes sure it’s the same day and date), or you sell licensing rights to all or a certain number of your titles. Each method has pluses and minuses, and the choice is usually based on a company’s specific needs.

“More and more we’re going with a straight DVD pieces rather than rights,” Mann said, “because we’re usually more interested in a revenue-share model than a flat-rate model.”

That particular model works well for Evil Angel since, thanks to groundwork laid down in Europe by Mann’s predecessor, Chris Norman, it’s “one of the few American brands that have a serious visibility and power in the Euro market — a brand Europeans have come to think of as a must-have.”

To those tried and true models, a third has been added in recent years: VoD — although, as Mann points out, many overseas consumers “get their VoD needs met by American companies, like Hot Movies — which is huge in Europe — or AEBN or Gamelink.” But individual deals can still be worked out.

There is general agreement on the best sales territory: “Germany,” says Elegant’s Travis, emphatically. Followed, for most companies, by Spain, Italy and France.

For sheer volume, Mann says, “the territory known as ASG — Austria, Switzerland, Germany — sometimes known as ‘Germanspeaking Europe’ — is still No. 1. Australia is very important to us. It’s more difficult to quantify the Australian market because we do that as a rights deal, as opposed to Germany where we’re selling finished goods.”

Scala, one of Europe’s major distributors, covers the fertile territory once known as Benelux — Belgium, Netherlands, Luxembourg — with partnerships with several American companies, including Evil Angel.

Girlfriends’ O’Connell said they’ve been offered exclusive distribution deals, “but we owe our European toehold to the mom-and-pop operations that took a chance on us years ago and gave us our start. We wouldn’t turn our backs on them, especially as they are experiencing hard times just like their U.S. counterparts.”

Marc Bruder’s CED, which deals exclusively with broadcast rights, does 70 percent of its business overseas with particular success in Mexico and Brazil. He predicts that Latin America will soon be a “huge market for everybody.”

“American made adult product, worldwide, is still the most desirable content,” Bruder maintains. “The parodies are huge around the world. If you’re playing on Dorcel TV in France, they want parodies. If you’re playing in Erotic Media in Germany, they want the parodies — No. 1. Then it’s Celebrity, and then Teen. It’s the same genres as here that work there.” The only genres that don’t go over outside the U.S. are Urban and Interracial.

Many incipient markets are waiting to be tapped. One of the ripest, according to Mann, is the CIF — Commonwealth of Independent States — which includes Russia and some other Eastern Bloc countries (though not Czech Republic, which has been well penetrated).

Pink Visual’s Boyer observes that “certain countries might represent outstanding opportunities someday but are currently very difficult, if not impossible, to monetize, due to local legal restrictions, and/or the lack of a reliable mechanism for billing customers in that country.”

The likeliest territories, says Mann, are “wherever technology is taking root in what were once considered Third World or technologically slow countries.”

That would include Asia, and the prospect of an Asian porn market has U.S. producers salivating. “Its size,” O’Connell says, “dwarfs all our current markets combined. There are a few things that have to happen before that market opens to us —but I hope I’m around when it does.”

For the future everyone is looking at IPTV (Internet Protocol Television) as the new business model. “That technology hasn’t been too much adopted yet, for adult programming,” Bruder said. “Like, bring it into your computer and transfer it over to your big-screen 3D TV.”

But it’s only a matter of time until so-called convergence takes place. For Mann, the sheer number of likely viewers makes it a good thing, long term. But, “the difficulty is how to monetize it, especially because on the Web we’re dealing with competition from piracy in a way that we never had to with DVD or VHS. Yes, there were pirated DVDs, but not with the ease and almost cultural acceptance that the web has given rise to.”

Plaid Bag’s Reynolds sums it up: “You have to look at every possible platform, every corner of the world. That is how a studio is going to flourish in the future.”


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