Industry Execs Say Overseas Distribution Remains Viable
Are there any profits still to be gained from foreign sales of adult movies? Shoot that question to Moose, owner of Girlfriends Films, and his answer is immediate and emphatic: “Yes — hell yes!”
An informal survey of some top company heads and distributors yielded pretty much the same response, with estimates of the size of the overseas revenue pie ranging from 25 to 35 percent.
Adam Grayson, Evil Angel’s chief financial officer, is just as upbeat as Moose. “Over the past year, international trends have continued for Evil Angel. Europe and Latin America continue to be key markets for us, to the point we are now exploring acquisition opportunities abroad to better position ourselves in those regions. Overall, international business has grown for us in the past year, though obviously DVD could best be described as ‘flat at best.’
“Our other business units (web, broadcast, licensing), however, have more than made up for any DVD decline.”
Wyatt Case, vice president of sales at Smash Pictures, sums up their overseas sales profile succinctly: “Germany takes the most U.S. product for us. The market is shrinking in some countries but still viable in others. Yes there are profits left with foreign sales. Both VOD and streaming would seem to be equal here. There is a demand for high-end hot, pro-shot content overseas just like there is here in the States.”
“The market seems to be steady,” adds Howard Levine of Exile Distribution. “We have done really well with great content. Great content sells. We did better in the first two quarters than we did last year. I still sell only to distributors, who in turn sell stores and the web.”
Some companies face particular hurdles. According to Bob Christian, general manager of Adam & Eve Pictures, a studio that does very well domestically, “An issue we have in the international market is that the Adam & Eve brand is not as well known, plus that many international markets are used to much harder genres than Adam & Eve produces.”
He estimates foreign sales at “maybe only 15-20 percent for us. We have licensing arrangements, but no real strong ‘output deals’ in place, so our foreign money is not as large as some other studios’ might be.”
Industry veteran Chuck Zane, who sells overseas for Black Market/Homemade Media, says, “The market is definitely shrinking for DVD sales as in the U.S. The price per DVD is also shrinking. Our biggest buyer is a Dutch company, but they sell all over Europe.”
Sales for Girlfriends Films have always been strong overseas, and according to Moose, there are two reasons for that: storyline and location.
“Much of what they produce in Europe is a more extreme, shocking, envelope pushing, vignette style. If they do a feature film, they are few and far between, and there isn’t a lot of build-up or continuum. In comparison, a lot of our titles look PG-13, and that’s a hook we capitalize on. We draw them in with story and, keep them coming back for the characters, the locations, and the real sex.
“Similarly, our international customers want to get a taste and feeling for diverse landscapes and cultures. We try to think about scenery and getting our cameras outside to capture as much of the action and story telling as we can. Filming in bedrooms can be done anywhere and doesn’t define the culture of America.
“‘Baywatch’ is a great example — this TV show has done phenomenally internationally because of the scenery. People tuned in to see the Malibu shoreline, lifeguards, and bikinis. This is very much the same concept we use with titles like ‘Road Queen,’ ‘Pin Up Girls’ and ‘Girls in White.’”
Marc Bruder, owner of Cable Entertainment Distribution (CED), now in its 31st year of licensing broadcast rights to adult product, with a specialty in overseas sales, thinks along similar lines.
“What do broadcasters desire for adult content these days? The high-budget romance movies (Wicked, New Sensations, some Jules Jordan, Mile High and others) and always compelling, cutting edge, never-before-seen, pushing-the-envelope hot sex.
“All of the genres and categories work when they are HD, high quality, gorgeous talent and well edited with great music…The CED mission is to get that on air and prior to the online legit or pirate exposure…”
There is general agreement that, all things considered, the best overseas porn market is populous, prosperous Germany.
“I would say Germany is our strongest foreign market (after Canada),” says Adam & Eve’s Christian.
According to Exile’s Levine, “Germany, Spain, Australia are about equal. There is still a big market with international sales.”
“The largest market is still Germany,” says Chuck Zane, “but the German market is also getting less and less. An interesting story concerning one of Germany’s largest chain stores: They say the German customer has turned against U.S. productions because of the influx of cheap DVDs. They lump all U.S. productions together so even the US companies that make quality DVDs are being affected.
“There is still a profit for sure but just smaller, as in the U.S. sales. It is a far cry from the days each country had distributors that would license the U.S. titles and put them out under their own labels. They would repackage in the language of that country and even dub in the language of the country. When I owned Zane back in the day I had more net income from foreign sales than domestic per year for most of the ’90s.”
“You really have to understand customer tastes in each country to maximize revenue,” says Evil Angel’s Grayson. “Unlike the U.S. where all 50 states are reasonably similar, what works in Germany doesn’t necessarily work in France or Poland. Germany is still the most reliable international market for us, as it probably is for many U.S. exporters, adult or otherwise.
“We’re really fortunate for Evil Angel’s strong brand awareness in Europe and Latin America, thanks to 26 years of strong distribution partners in those regions. The brand means something to an awful lot of customers, and they’ve remained very loyal to us. I recently had a very large European DVD distributor tell us, ‘The day we stop carrying Evil Angel is the day we go out of business.’”
How about delivery to the end user? For Girlfriends, “Each partner we have has a slightly different business model. We cater to VoD and streaming companies as well as the DVD market. Novelty items are bringing people into stores, and that’s where our DVDs get seen.”
Black Market’s Zane sees “a big change in how we deliver to VoD sites here and in Europe. Just a while ago we would load up a hard drive and send it air to the licensor. But just recently we have been putting up all of our titles on our server for download to VoD sites and the few European companies that still license product.”
At Adam & Eve, says Christian, “VoD and membership sites have enjoyed terrific growth in the last year … and gross revenues are exceeding DVD sales, so it would be reasonable to say the preferred delivery method is digital today.”
“You must sell on all platforms,” adds Exile’s Levine.“I guess VoD is very popular but I still sell a lot of DVDs.”
For Girlfriends Films, says Moose, the overseas sales picture keeps “improving… The secret is almost entirely relationship focused. Know your customers. Listen when they want to run specials, and if you want to really saturate the market, remember to keep your pricing fair so everyone can make a profit. Support the international economy and business by advertising and participating in trade shows. Take your stars to meet the buyers and the fans. Work diligently to overcome roadblocks, whether it’s pricing or shipping or customs. Immerse yourself in the customer service aspects of the relationship.”
CED’s Bruder looks at the big picture. “The U.K. pays very little for content, and Germany uses less titles these days than in the past and their fees have gone down as well. Australia, the Netherlands, most of Western Europe is constant and their prices have remained OK. Latin America is a good market but has not grown in the past few years,” adding that “all in all there is revenue to maintain a thriving business if the producer is shooting ‘the right stuff.’”
Bruder puts CED’s sales in an historical perspective: “Overall: we see about 40 percent of all adult revenue come from the U.S. and 60 percent or more some months come from overseas systems. Just five years ago it was about 50/50, and 10 years ago 70 percent of all revenue we generated came from the U.S.
“My advice for producers is to continue shooting great HD (and now 4K) product that is new, well produced, with hot new talent always — and listen to your distributor.”